TV and film rights firm and owner of kids TV favourite Peppa Pig, Entertainment One (ETO) surges nearly 30% to 573p on the back of a £3.3bn bid from US toy manufacturer Hasbro.
The news follows on from the recently announced £4.6bn takeover of pubs firm Greene King (GNK), and is another indication that the weakness in sterling is making UK firms vulnerable to overseas predators.
Hasbro’s approach, recommended by management, values Entertainment One (or eOne for short) at 560p per share so it appears the market is expecting rival interest from elsewhere.
Shares recently added the stock to its Great Ideas portfolio, in an article you can read here.
UK toy maker Character (CCT) slumps 18.1% to 430p as investors price in the likely loss of a valuable licence for Peppa Pig-related products.
Hasbro says the acquisition will advance its position as a play and entertainment company, adding global preschool brands with 'proven success and strong financial returns across platforms to Hasbro's robust portfolio'.
BRINGING HOME THE BACON
The deal is expected to generate synergies of around $130m by 2022, it adds.
These would be driven by integration benefits, savings from moving a significant portion of eOne's toy business in-house and enhancing the profitability of eOne's licensing and merchandising activities.
Numis analyst Steve Liechti says: ‘We see the offer price as fair but not necessarily knock-out value if other media/entertainment (or digital) players can see good or even better synergies from ETO's portfolio of assets and capabilities.’
READ MORE ON ENTERTAINMENT ONE HERE
But who else might come in for eOne? AJ Bell investment director Russ Mould says: ‘It wouldn’t be surprising to see Amazon or Netflix want to throw their hat in the ring given how Entertainment One has such a big library of content which they need in order to keep customers loyal to their streaming platforms.
‘While both these companies already licence content from Entertainment One they only get the films and TV shows for a specific period of time.
‘Perhaps more logical would be a counter-bid from Disney given it is part owner of the PJ Masks brand alongside Entertainment One. The imminent launch of Disney’s new streaming service would be an ideal time to lock in a host of new characters like Peppa Pig.’
