Toymaker Hasbro announced on Friday that it will buy Entertainment One (eOne), the company behind children’s preschool brand Peppa Pig, in an all-cash transaction valued at $4 billion (£3.3 billion).
Under the terms of the agreement with the maker of Monopoly and other time-honored toys, Entertainment One shareholders will receive $6.85 in cash for each common share of eOne stock, a 31% premium to eOne’s 30-day volume-weighted average price as of Thursday.
Hasbro stated it could issue between $1 billion and $1.25 billion in equity in a secondary offering to finance the acquisition.
Hasbro expects the purchase to accelerate the company’s long-term profitable growth, according to a press release. EOne, a Canadian TV and film company, is best known for Peppa Pig and PJ Masks.
Hasbro also expects to realize in-sourcing and other global annual run-rate synergies of about $130 million by 2022, driven by integration benefits, substantial savings from moving a significant portion of eOne’s toy business in-house, and enhancing the profitability of eOne’s licensing and merchandising activities.
Hasbro’s purchase of “highly profitable and merchandisable preschool brands” is a strategic growth opportunity for Hasbro in the infant and preschool category, the largest super-category in the toy and game industry in the G11 markets, according to a recent release from the New Product Development (NPD) Group.
“The acquisition of Entertainment One adds beloved story-led global family brands that deliver strong operating returns to Hasbro’s portfolio and provides a pipeline of new brand creation driven by family-oriented storytelling, which will now include Hasbro’s IP,” said Brian Goldner, Hasbro’s chairman and CEO.
“In addition, Hasbro will leverage eOne’s immersive entertainment capabilities to bring our portfolio of brands that have appeal to gamers, fans, and families to all screens globally and realize full franchise economics across our blueprint strategy for shareholders,” Goldner said.
This deal comes about a month after Mark Gordon stepped down as president and chief content office of eOne’s film and TV divisions. Hasbro said that “top eOne executives” will be joining Hasbro after the sale, but did not identify them.
The release also said that Peppa Pig is an “evergreen property” that has thrived for more than a decade and extended itself to new profit streams that continue its success.
A slate of additional brands is under development, including Ricky Zoom, a unique storyline with highly merchandisable content airing on Nickelodeon in the United States and other top-tier global networks starting on Sept. 9.
Entertainment One is a global independent studio with expertise that spans across film, television and music production and sales, family programming, merchandising and licensing, and digital content. Its network includes Amblin Partners with DreamWorks Studios, Participant Media Reliance Entertainment, and Whizz Kid Entertainment.
“There’s a strong cultural fit between our two companies; eOne’s stated mission to unlock the power and value of creativity which aligns with Hasbro’s corporate objectives,” said Entertainment One CEO Darren Throop.
“EOne teams will continue to do what they do best, bolstered by the access to Hasbro’s extensive portfolio of richly creative IP, and merchandising strength,” Throop added.
The transaction is expected to close during the fourth quarter of 2019.
In related news, Entertainment One in mid-July unveiled details of My First Album, the first-ever Peppa Pig music album. The company will release the album of its “beloved character” in English-speaking countries including the United Kingdom, the U.S., and Australia as part of the brand’s upcoming 15th-anniversary celebrations.
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