NEW YORK • Pre-school television favourite Peppa Pig is moving in with the Power Rangers, Transformers and Mr Potato Head.
Toy maker Hasbro will buy Entertainment One, owner of the popular animated series, for about US$4 billion (S$5.5 billion) - marking its biggest acquisition ever, according to data compiled by Bloomberg.
The deal adds the character and a suite of other children's media properties to its portfolio of bankable brands and positions Hasbro as a bigger player in the TV and movie segment.
Under the terms of the all-cash transaction, Entertainment One shareholders will receive £5.60 (S$9.50) for each common share, which Hasbro said represents a 31 per cent premium to its 30-day average price. Hasbro's shares slipped in late trading.
The transaction marks a major expansion of Hasbro's media efforts as well as another example of the race to pick up smaller content owners and producers as a plethora of video-streaming companies come onto the scene.
The deal will give the toy firm Entertainment One's scripted and unscripted TV production and development capabilities, which include animated and live action shows.
Hasbro has been a driving force in turning toy properties like Transformers into entertainment, but until now it has had to license its characters to studios to make films, said Gabelli & Co analyst John Tinker.
After years of looking for an entertainment company to buy, including dalliances with Lions Gate Entertainment and DreamWorks Animation, Hasbro has finally locked up a deal that "can take their business to another level", said Mr Tinker. "If they want to make larger films, they are equipped to do so."
The acquisition also expands Hasbro's global reach by adding a major international brand to its portfolio.
Peppa Pig is a global success, with huge viewership in China, and new brand Ricky Zoom has the makings of a hit, too, said Mr Tinker. About half of Entertainment One's revenue comes from outside the United States.
Mr Tinker also noted that the declining value of the pound made Entertainment One, which is listed in London, a better deal for an American company.
Hasbro executives said share buybacks will be halted and that cash will instead be allocated to paying down debt. The company will maintain its dividend programme.
Chief financial officer Deborah Thomas said the company wants to keep its investment grade rating and will look to finance the deal via term loans, bonds and proceeds from an equity offering of US$1 billion to US$1.25 billion.
Hasbro shares fell 4 per cent to US$109.80 at 4:44pm in late trading in New York. The stock has gained 41 per cent so far this year.
BLOOMBERG
