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Newly-installed Hasbro CEO Chris Cocks has detailed the toy giant’s stepped-up drive towards becoming a gaming powerhouse amid an on-going proxy battle with activist investor Alta Fox Capital Management.
“Make no mistake, Hasbro is a games company. In 2021, games was a $2.1 billion business growing at 19 percent with an operating profit margin of more than 30 percent. Games are the beating heart of Hasbro, and we will invest accordingly,” Cocks said in a letter to shareholders unveiled ahead of the company’s upcoming annual shareholders meeting.
Following the death of CEO Brian Goldner, Cocks became the company’s top exec after serving as president and COO of the Wizards of the Coast and Digital Gaming division. On Monday, Cocks said a second focus at Hasbro will be on “multigenerational play & entertainment.”
“Transformers hints at the possibilities. We engage kids as young as two and three with Rescue Bots and our newest streaming series, Transformers BotBots, extend into amazing toys and games, and follow consumers through their lives with high-ticket collectibles, video games and blockbuster entertainment,” the executive explained in the letter.
Earlier Goldner had accelerated the toymaker’s push into original entertainment content with the purchase of the Peppa Pig and PJ Masks studio Entertainment One in 2019. The new CEO didn’t mention eOne directly in his investors letter, and instead talked about the entertainment division as part of a broader games-driven growth strategy for the toy maker.
“Across entertainment, games and consumer products we will focus on fewer, bigger strategic priorities and scale, driving sustainable, profitable growth across bets with billion-dollar plus revenue potential,” the executive wrote.
Also Monday, Rich Stoddart, Hasbro’s board chairman, addressed the proxy battle with Alta Fox, which included the activist investor calling for a spin-off of the lucrative Wizards of the Coast division that the toy maker has rejected.
“The board appreciates Alta Fox’s input as a shareholder and its passion for Wizards of the Coast, and agrees Wizards is a uniquely valuable asset, but it is clear that Alta Fox has some fundamental misunderstandings of the underlying business,” Stoddart wrote.
“The board has evaluated a tax-free spin-off of Wizards of the Coast and concluded that it is unlikely to create value, is contrary to Hasbro’s strategy, and would negatively impact the benefits Wizards realizes today from Hasbro’s Brand Blueprint on a consolidated basis. As a result, the board believes pursuing such a transaction would not be in the best long-term interests of all our shareholders,” Stoddart added.
On Monday, Hasbro also rejected a director slate nominated by Alta Fox to its board room, while the toy giant nominated two proposed new directors of its own — Discord COO Elizabeth Hamren and Blake Jorgensen, executive vp of special projects at Electronic Arts — from the digital and gaming space.
“We believe Hasbro’s decision to initiate what appears to be a defensive and reactionary expansion of its board validates shareholders’ significant concerns about the company’s insular and ineffective corporate governance,” Alta Fox said in a statement.
“In our view, the board’s desire to continue operating Hasbro like a family business is a flashing red light for change and an obvious indicator that shareholder-appointed directors are needed at the company. We look forward to filing our proxy statement in the near-term and giving shareholders the opportunity to vote for the right change at the annual meeting,” the hedge fund added.
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