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A Hasbro activist investor, Alta Fox Capital Management, has unveiled an investor presentation that nominates five candidates to stand for election to the toy maker’s board of directors and urges a spin-off of the lucrative Wizards of the Coast division.
“Hasbro engages in regular communication with its shareholders and welcomes constructive input to further the best interests of all shareholders,” Hasbro said in a statement issued on Wednesday evening as it confirmed receiving the nomination notice. That was before the 100-page investors presentation, entitled “The Case to Repair Hasbro,” was published online early on Thursday morning.
The toy maker giant added it has met with Alta Fox “to better understand its views on the company’s strategy” and will review its nominees ahead of Hasbro’s 2022 annual meeting of shareholders.
Alta Fox, which has a 2.5 percent stake in Hasbro worth around $325 million, argues the toy maker’s “brand blueprint” strategy — where the media player produces movies and TV series through its Entertainment One filmed entertainment division and a long-standing pact with Paramount to drive toy sales — “is little more than a generous term for ’empire-building’ without financial discipline, and that significant change in strategic direction is needed.”
The activist investor in its presentation takes aim at Hasbro’s acquisition of eOne. “The expensive and speculative eOne acquisition for $4.6 billion in 2019 was not required to make a MTG (Magic: The Gathering) TV show or D&D (Dungeons and Dragons) movie and saddled the company with billions in debt, which years later it is still working to repay – this is reinvestment capital that could have gone into further developing core WOTC IP,” Alta Fox wrote.
The activist investor calls for the “majority of [Hasbro’s] value” to be unlocked by spinning off the Wizards of the Coast unit, which in turn will boost Hasbro’s shareholder value. “In our view, this is an incredible and misunderstood asset with a long growth runway that is worthy of a premium valuation multiple,” Alta Fox argued.
Chris Cocks will become Hasbro’s CEO on Feb. 25 after currently serving as president and COO of the Wizards of the Coast and Digital Gaming division. Cocks succeeds Brian Goldner, who died in Oct. 2021 at age 58 years after transforming the toymaker into an entertainment powerhouse, which included the purchase of the Peppa Pig and PJ Masks studio eOne in 2019.
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