Hasbro Inc. is purchasing Toronto-based Entertainment One Ltd. in a US$4-billion all-cash deal that brings together the maker of Transformers toys and the Monopoly game with the producer of children’s shows, Peppa Pig and Clifford the Big Red Dog.
The Pawtucket, R.I.-toymaker said the acquisition of the Canadian music, film and television producer will bring its brands to “to all screens globally” and enhance its infant and preschool products, a key growth segment for the company. The deal puts eOne’s portfolio, including shows such as Peppa Pig and PJ Masks, under the same roof as the toy and entertainment franchises My Little Pony, Transformers, Play-Doh, Nerf and Power Rangers.
Shareholders of eOne, which trades on the London stock exchange, will receive £5.60 per common share, a 31-per-cent premium of its 30-day average price. Its shares closed at £4.42 on Thursday. Hasbro is funding the acquisition through debt financing and US$1-billion to US$1.25-billion in cash from equity financing.
“The acquisition of eOne 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 [intellectual property],” said Hasbro chairman and chief executive officer Brian Goldner in a release.
EOne’s Canadian TV and film operations – largely located in Toronto, Vancouver and Montreal – will continue to operate as a Canadian-controlled business within Hasbro, the company said. EOne also has operations in London, Los Angeles, New York, Hong Kong, Melbourne and Shanghai. Hasbro said that it will retain eOne’s senior executive team.
“Hasbro’s portfolio of integrated toy, game and consumer products will further fuel the tremendous success we’ve achieved at eOne,” said eOne’s chief executive Darren Throop. “There’s a strong cultural fit between our two companies; eOne’s stated mission is to unlock the power and value of creativity which aligns with Hasbro’s corporate objectives."
EOne has made a steady stream of acquisitions, including a joint venture with the Mark Gordon Company, which has produced shows such as Grey’s Anatomy and movies such as Saving Private Ryan.
In 2013, eOne also bought Canadian movie-distribution company Alliance Films for $174-million, plus debt, in a deal that boosted eOne’s profile as a major international independent film distributor, bringing aboard titles such as The Hunger Games.
In 2015, the Canada Pension Plan Investment Board took an 18-per-cent stake in eOne, then-valued at $289.4-million, pledging to help the media company succeed in its global expansion plans.
Hasbro said that, with eOne, it plans to expand its brands to new formats, including streaming, music, location-based entertainment, augmented reality and virtual reality.
“EOne’s brands and TV and film expertise, together with Hasbro’s brands, toy and game innovation and licensing capabilities, position us to more quickly drive revenue and profit over the medium-term," Hasbro’s chief financial officer Deborah Thomas said.
EOne says on its website its Canadian incorporation reflects its “beneficial Canadian heritage status” and its film and television business in the country.
Mr. Throop grew up on a farm northeast of Red Deer, Alta., and told The Globe and Mail in 2015 that eOne has largely flown under the radar in Canada “by design.”
“We just haven't been pushing the story in the Canadian marketplace like some of our predecessors and our counterparts currently are. They're always doing whatever they can do to get their name in the press."
In 2015, eOne moved 500 of its Toronto employees into an office that is a stone’s throw from the headquarters of the Toronto International Film Festival.
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