Earlier this week the board of brewer and pub chain owner Greene King recommended its shareholders accept an acquisition offer made by CK Asset Holdings, the investment vehicle controlled by Li Ka-shing, Hong Kong’s richest man. US private equity group Advent has also agreed a deal for Cobham, the defence contractor, for £4 billion. Today news has broken that Entertainment One, the London-listed Canadian production company behind the hugely successful Peppa Pig kid’s animation, is to taken over by U.S. toy-maker Hasbro.
With pound sterling dropping to multi-year lows this week on heightened fears of a no-deal Brexit, international companies appear to be swooping in to take advantage of the favourable currency climate to acquire UK assets at bargain prices. The deal reached will see Hasbro pay Entertainment One shareholders 560p for common shares, which had yesterday closed the London trading session at 443.5p. The offer, which will be paid in £3.3 billion cash, adds up to $4 billion at the current exchange rate.
Hasbro, which is the USA’s largest toymaker, already owns the Power Rangers, Transformers, My Little Pony and Monopoly brands. It is pursuing a strategy of acquiring production and media companies that own the rights to popular brands with strong commercial value in the toys and merchandise markets.
Entertainment One was originally founded as a retail music distributor, then named Records on Wheels, back in 1973. It subsequently evolved into a major independent film distributor. Originally from Toronto, where the company is still headquartered, it chose to list on the London Stock Exchange in 2007. The company was behind the film Green Book, which won this year’s Oscar for best picture.
However, Peppa Pig, is undoubtedly the jewel in the Entertainment One crown. It has become one of the most popular children’s TV shows of all time. Its simplicity has proven to be its strength, helping the short, animated cartoons to appeal to a huge range of international audiences. It’s one of a very select band of Western TV shows to be popular in China.
The success of the Peppa Pig show has led to a hugely lucrative market for branded toys and other merchandise and even theme parks. Entertainment One chairman Allan Leighton commented this morning:
“On behalf of the board of E One, I am very pleased by this exciting development, which is a testament to E One management’s vision, leadership and solid execution. This transaction creates significant, immediate value for our shareholders as it recognises the strength of our future-facing business model.”
City analysts expect more acquisition moves for London-listed companies over the coming weeks and months. With Brexit uncertainty meaning many valuations already look good value compared to comparable companies listed in the USA or on other major international markets, the fall in the value of the pound has added more impetus for would-be buyers already circling.