Preschool television favorite Peppa Pig is moving in with the Power Rangers, Transformers and Mr. Potato Head.
Toymaker Hasbro Inc. will buy Entertainment One Ltd., the Toronto-based owner of the popular animated series, for about $4 billion — its biggest acquisition ever, according to data compiled by Bloomberg. The deal adds the character and a suite of other kids media properties to its portfolio of bankable brands and positions Hasbro as a bigger player in the TV and movie segment.
Under terms of the all-cash transaction, shareholders of Entertainment One, also known as eOne, will receive 5.60 pounds for each common share, which Hasbro said represents a 31% 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 comes onto the scene.
The deal will give the toy company 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 such as Transformers into entertainment, but until now, it has had to license its characters to studios to make films, said John Tinker, an analyst for Gabelli & Co.
After years of looking for an entertainment company to buy, including dalliances with Lions Gate Entertainment Corp. and DreamWorks Animation, Hasbro has finally locked up a deal that “can take their business to another level,” Tinker said. “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 big viewership in China, and new brand Ricky Zoom has the makings of a hit too, Tinker said. About half of Entertainment One’s revenue comes from outside the U.S.
Tinker also noted that the declining value of Sterling made Entertainment One, which is listed in London, a better deal for an American company.
Hasbro, based in Pawtucket, R.I., plans to plug these characters into a brand-building infrastructure that has turned dormant properties like My Little Pony into massive revenue generators.
Hasbro shares fell 4% to $109.80 at 4:44 p.m. in late trading in New York. The stock has gained 41% so far this year.