Entertainment One agrees £3.3bn sale to Hasbro
Peppa Pig's owner Entertainment One has agreed to be bought by Hasbro in an all-cash deal valuing the UK-listed company at £3.3bn.
The US toymaker will pay 560p for each eOne share - 31% more than eOne's average share price over the past 30 days and a 26% premium to the 443.40p closing price on 22 August.
Hasbro, whose products include Monopoly and G.I. Joe, said the purchase would bring it global family brands, including Peppa Pig and PJ Masks, and allow the company to capture more of their value. Hasbro said it would also use eOne's abilities in TV development and production for its own characters.
The US company said it expected $130m (£107m) of gains by 2022 from cost cuts, moving much of eOne's toy business in-house and making eOne's licensing and merchandising more profitable. Hasbro said eOne's top team would stay with the business.
Allan Leighton, eOne's chairman, said: "I am very pleased by this exciting development, which is a testament to eOne management's vision, leadership and solid execution. This transaction creates significant, immediate value for our shareholders."
EOne is the latest UK company to be bought by an overseas purchaser taking advantage of sterling's weakness as fears mount about a no-deal Brexit. On 19 August Greene King agreed a sale to Hong Kong's CK Asset and in July Cobham announced it would be bought by US private equity firm Advent.
Peppa Pig is eOne's main revenue generator through sales around the world of the long-running TV series and licensing agreements for toys and other products related to the character. The business also includes a film division, which is less successful but has had recent hits including Green Book and Stan and Ollie.
The sale of eOne to Hasbro coincides with a content battle between traditional media companies and streaming platforms such as Netflix and Amazon, which are spending billions of dollars to produce their own programmes.
EOne shares rose 31% to 585p at 11:38 BST, suggesting some investors think a counter-bid could arrive to secure the rights to Peppa Pig.
RBC Capital Markets analyst Drew McReynolds said: "Given the nature of the current content cycle where there are a number of emerging large new entrants and platforms alongside several large incumbents, we would not rule out a competing bid for eOne. However, we view the probability of a competing bid to be much less likely than not."
He said Hasbro's $130m of estimated gains, a competitive offer price and eOne's ability to size up proposed offers suggested a rival offer was unlikely.
In May, eOne, headquartered in Toronto but listed in London, reported a 43% fall in annual profit to £36.8m as the FTSE 250 company was hit by a £61m charge related to its home entertainment business.
Revenue slipped to £941m from £1bn as lower film, television & music income more than offset a 28% increase in family & brands revenue to £158.5m. Underlying pre-tax profit was up 20% to £156m.