Hasbro to buy Entertainment One for $4 billion

US toymaker giant Hasbro will acquire Entertainment One, owner of long-running children’s series Peppa Pig, for $4 billion. According to Hasbro, the arrangement will magnify the company’s “family-oriented storytelling” portfolio. The acquisition will also enable the company to transform from toy manufacturing to a media company.

In the definitive arrangement between the two brands, Hasbro will acquire Entertainment One in an all-cash transaction. Entertainment One shareholders will receive $6.80 for each common share, a 31% premium to the 30-day volume-weighted average price as of August 2019.

Over the years, Entertainment One or eOne has acquired, distributed, and produced music, films, and television series. The multinational mass media and entertainment company has also produced several children’s content including fourteen-year preschool prodigy, Peppa Pig.

Peppa Pig continues to generate sales around the globe. Peppa Pig, including Pj Masks, generated $2.5 billion in retail sales last year.

Entertainment One prides itself on its network of film distributors, TV producers, live entertainment groups, and music labels. It has recently signed a multi-year deal with television and film producer Mark Gordon. Gordon is behind Grey’s Anatomy, Steve Jobs, and War Dog.

Hasbro is the biggest toy manufacturer in terms of stock market value. The American company is behind celebrated products like Monopoly, G.I. Joe, My Little Pony, Power Rangers, and many others. It has also spawned television shows to promote its products.

With the acquisition of Entertainment One, Hasbro’s revenue and profit are expected to increase. Market Insider forecasts Entertainment One sales to grow by more than 10% this financial year. Hasbro’s sales, meanwhile, are projected to increase 9% this year and 4% in the next.

With Hasbro purchasing Entertainment One, the former buys access to a $2 billion content library that includes 80,000 hours of movies and television shows as well as 40,000 music tracks.

Hasbro will also be armed with the technical expertise of Entertainment One, most especially in production and distribution. It can be likely that Hasbro will roll out streaming service and produce original movies and shows showcasing its products.

In a statement, the chairman and chief executive officer of Hasbro, Brian Goldner said: “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.”

Goldner adds that Hasbro will leverage eOne’s capabilities to elicit a portfolio of brands that appeal to fans, families, and screens worldwide. It will also realize franchise economics across its blueprint strategy for shareholders. Aside from that, Goldner is excited to welcome eOne’s employees from around the globe into the Hasbro family.

“Hasbro’s portfolio of integrated toy, game and consumer products, will further fuel the tremendous success we’ve achieved at eOne,” states Entertainment One chief executive officer 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 access to Hasbro’s extensive portfolio of richly creative IP and merchandising strength. Also, 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,” adds Throop.

Hasbro’s chief financial officer Deborah Thomas is optimistic about the agreement.

She said: “By combining two profitable and financially disciplined companies we expect to unlock value in the short- and long-term for our stakeholders, eOne’s brands and TV and film expertise, together with Hasbro’s brands, toy and game innovation, and licensing capabilities, positions us to more quickly drive revenue and profit over the medium-term. We remain committed to maintaining an investment-grade rating and returning to our gross Debt to EBITDA target of 2.00 to 2.50X.”

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