Hasbro Buys Entertainment One for $4 Billion

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www.hollywoodreporter.com/news/hasbro-buys-entertainment-one-4-billion-1233917

The toy maker acquires the studio and its 'Peppa Pig' and 'PJ Masks' kids properties and a global film and TV production and distribution business.
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.

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variety.com/2019/tv/news/hasbro-acquires-entertainment-one-in-4-billion-all-cash-deal-1203311068/


Hasbro Acquires Entertainment One in $4 Billion All-Cash Deal

Toymaker Hasbro is acquiring studio Entertainment One in an all-cash transaction valued at $4 billion, bringing My Little Pony and Nerf under the same umbrella as “Peppa Pig” and “PJ Masks” and furthering Hasbro’s growth goals in the infant and preschool categories.

Hasbro aims to expand its operations in film and TV. Entertainment One’s production infrastructure in multiple markets and its children’s programming IP made it an attractive target for Hasbro. Sources say the news came as a surprise to most people at Entertainment One.

Top eOne execs will join the Hasbro team, said the companies in a joint statement. The independent studio pointed to its kid-friendly fare, noting that it has been transforming its business to focus on “high-quality premium talent-driven content,” including its “Clifford the Big Red Dog” and “Monster Problems.”

But the sale to Hasbro raises questions about whether eOne will remain in the business of producing adult-focused movies and TV series. Entertainment One’s active slate includes Netflix’s “Trailer Park Boys” and We TV’s “Growing Up Hip Hop: New York.”


On the investor call after the market close Thursday, Hasbro CEO Brian Goldner highlighted the potential to mesh eOne’s strength as a studio with Hasbro’s intellectual property.

“With eOne’s content creation capabilities … we can reach audience on all screens,” including cable and streaming, he said on the call.

Hasbro and Paramount Pictures in 2017 inked a deal to make live-action and animated films based on the toymaker’s intellectual property, but execs on the call indicated that that partnership would continue, even after the acquisition of eOne, opening the door to Paramount to further develop Hasbro’s IP.

Noting that eOne is profitable and that half of its EBITDA last came from its family brand portfolio, Goldner called “Peppa Pig” and “PJ Masks” “highly profitable and merchandisable.”

Per the terms of the deal, eOne shareholders will receive 5.60 pounds per common share, a 31% premium to eOne’s 30-day volume weight average price as of Thursday. Hasbro said the deal will be financed with the proceeds of debt financing and $1 billion to $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 IP,” said Goldner in a statement. “In addition, Hasbro will leverage eOne’s immersive entertainment capabilities to bring our portfolio of brands that have appeal to gamers, fans and families to all screens globally and realize full franchise economics across our blueprint strategy for shareholders. We are excited to welcome eOne’s talented employees from around the world into the Hasbro family.”

Adding eOne to Hasbro will be accretive to adjusted EPS in the first year after the transaction, with mid- to high-teens accretion to adjusted EPS in the third full year after the close of the deal.


Entertainment One chairman of the board Allan Leighton said that he is “very pleased by this exciting development,” calling it a testament to eOne’s management vision, leadership and execution.

“Hasbro’s portfolio of integrated toy, game and consumer products, will further fuel the tremendous success we’ve achieved at eOne,” said eOne CEO 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 teams will continue to do what they do best, bolstered by the access to Hasbro’s extensive portfolio of richly creative IP and merchandising strength. In addition, the resulting expanded Hasbro presence in Canada through eOne’s deep roots will bring world class talent and production capabilities to Hasbro. Along with our leadership team, I look forward to working with Hasbro on our joint growth and success for many years to come.”

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deadline.com/2019/08/hasbro-acquires-entertainment-one-studio-1202702051/


Hasbo Acquires Indie Studio Entertainment One In $4 Billion Deal


Hasbro and Entertainment One have made a deal to for the toy giant to acquire the independent studio in an all-cash transaction valued at $4 billion.

The combination will blend eOne preschool brands like Peppa Pig and PJ Masks with Hasbro’s TV and film expertise, which has taken a leap over the past decade through franchises like Transformers.

Under the deal, eOne shareholders will receive $6.86 in cash for each common share of eOne, which is a 31% premium to eOne’s 30-day volume weighted average price as of today.

In a conference call with investors, Hasbro CFO Deborah Thomas said the companies have identified about $130 million in cost synergies by 2022. The savings can be achieved through shifts like bringing licensing activities in-house, she said. CEO Brian Goldner said the $130 million is cost savings only, not revenue opportunities.

Top eOne executives have agreed to join the Hasbro team, the companies said. eOne’s Canadian TV and film operations will continue as a distinct Canadian-controlled business within the combined entity.

Hasbro has been mentioned as a likely M&A participant in recent years, with rumored partners including Lionsgate. Over the years, it has had merger discussions with the other top U.S. toymaker, Mattel.

Hasbro shares declined 4% in after-hours trading. Shares in eOne have gained 23% in 2019 to date 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,” Hasbro’s Goldner said. “In addition, Hasbro will leverage eOne’s immersive entertainment capabilities to bring our portfolio of brands that have appeal to gamers, fans and families to all screens globally and realize full franchise economics across our blueprint strategy for shareholders. We are excited to welcome eOne’s talented employees from around the world into the Hasbro family.”

Said eOne’s Allan Leighton: “On behalf of the board of eOne, I am very pleased by this exciting development, which is a testament to eOne management’s vision, leadership and solid execution. This transaction creates significant, immediate value for our shareholders as it recognizes the strength of our future-facing business model.”


Hasbro said it expects to suspend its current buyback program as part of the purchase, which was approved by both boards and is expected to close during the fourth quarter.