Toy maker Hasbro has acquired Canadian studio Entertainment One as part of a $4 billion all-cash transaction.
The deal, unveiled Thursday after the market close, hands Hasbro eOne's Peppa Pig and PJ Masks kids series and other top properties like Nickelodeon's Ricky Zoom. Under the terms of deal, eOne shareholders will receive $6.80 in cash for each common share, which Hasbro said represents a 31 percent premium to its 30-day average price.
Hasbro will use debt financing and a $1 billion to $1.25 billion equity offering to fund the takeover of eOne, which trades on the London Stock Exchange.
"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 IP,” said Brian Goldner, Hasbro chairman and CEO in a statement.
eOne, the subject of periodic takeover speculation in recent years, has recently shaped its business around Designated Survivor producer Mark Gordon and eOne Television; the family unit, driven by its Peppa Pig and PJ Masks franchises; international sales and production operation Sierra/Affinity; partnership in Amblin Partners with Steven Spielberg, Participant Media and Reliance Entertainment; and Brad Weston's film and TV producer Makeready.
The Canadian company in 2016 rejected an earlier takeover bid from U.K. TV group ITV worth $1.3 billion. ITV's abandoned acquisition of eOne, like the proposed deal with Hasbro, aimed to strengthen the suitor's international reach and establish a major foothold in film distribution and production.
eOne has a substantial TV library along with theatrical distribution in Canada, the U.K., Benelux and Australia, even as the indie distributor has done fewer and more higher-profile releases in recent years.
Gordon and eOne more recently rejigged their relationship, with the veteran Hollywood producer shifting to production after serving as president and chief content officer for film, television and digital, leading all creative units. Hasbro forecasts in-sourcing and cost synergies of around $130 million by 2022, in part by bringing eOne's toy business in-house and moving "underutilized" Hasbro content to be developed by its Canadian-based partner.
On an analyst call, Goldner was asked about the existing agreement Hasbro has with Paramount Pictures to produce and distribute content based on Hasbro brands and original concepts. The exec said that partnership would continue, and eOne would be used to develop non-core IP that is not part of the long-term deal that has Paramount and Hasbro jointly financing projects and the Hollywood studio distributing content worldwide.
Paramount and Hasbro also collaborate on TV projects. "Our partnership with Paramount is fantastic. What we see is an expansion of our opportunity with Paramount but also to develop IP that isn't part of our priority productions," Goldner explained.
eOne's Peppa Pig and PJ Masks properties already have licensing and merchandise partners, and Goldner said Hasbro by 2021 would be clear to bring those preschool brands in house and fully exploit them in the market.
Hasbro earlier in a statement said "top eOne executives have agreed to join the Hasbro team," without identifying who they might be. "Along with our leadership team, I look forward to working with Hasbro on our joint growth and success for many years to come," eOne CEO Darren Throop, who will continue to lead the indie studio, said in his own statement.
Hasbro, known for its toy-to-film properties like Transformers and G.I. Joe, touted the acquisition for accelerating his company's "brand blueprint strategy" by adding eOne's family brands and film and TV expertise.
"Hasbro's portfolio of integrated toy, game and consumer products will further fuel the tremendous success we've achieved at eOne," Throop added.
Hasbro's proposed deal for eOne has been unanimously approved by the respective board of directors of both companies. Subject to eOne shareholder and regulatory approvals, Hasbro expects its takeover deal to close by the end of 2019.