By Tanishaa Nadkar, Noor Zainab Hussain and Nivedita Balu
Peppa Pig-owner Entertainment One’s shares rose more than 30%, to a record high, yesterday, surpassing the price agreed by the company’s board with US toy maker Hasbro, in a sign that investors see some chance of a counter offer.
On Thursday, the boards of the two companies said that they had agreed a price of roughly $4bn (€3.6bn) in cash for the deal, which gives Hasbro access to Entertainment One’s lucrative shows for infants and pre-schoolers.
Under the deal, Entertainment One’s shareholders will receive 560 pence per share, representing a premium of 26.4% to Thursday’s share price close. Entertainment One’s shares rose to as much as 582 pence yesterday.
“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,” RBC analysts, who raised their price target for Entertainment One, said.
The buyout offer comes months after eOne denied reports that award-winning producer Mark Gordon would leave the company and said he will continue to develop and produce content for them, following a multi-year production deal.
Entertainment One, which started life as a Canadian record and tape retailer, reported a 21% rise in annual underlying core earnings, to £198m (€218m), in May, driven by growth in family and brands business, as well as higher margins in its film, television, and music unit.
The company had rejected a £1bn takeover offer from British commercial broadcaster ITV, in 2016, saying it undervalued the production and distribution company.
“For Hasbro to buy Entertainment One for the Family & Brands division makes a lot of sense, adding Peppa Pig, PJ Masks, and the newer Ricky Zoom brands to its licensing portfolio,” Fiona Orford Williams, director and media analyst at Edison Group, said. “It is much less clear how the film, TV, and music division fits in the enlarged group."
A deal for the independent Entertainment One will give Hasbro — the Nerf and Power Rangers toymaker — more exposure in its content media push, where it has been buying smaller firms and tying up with major movie studios to boost sales of toys linked to movie franchises.
Peppa Pig, which brings in the bulk of revenue at eOne, is streamed on several platforms across the globe and has been grabbing more sales with the growing popularity of its toys and merchandise.