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Hasbro to Purchase Entertainment One for $4 Billion Cash

Company will Leverage eOne's Entertainment Capabilities

Hasbro have entered into an agreement to purchase Canadian TV, film and music company Entertainment One (eONe) for an all-cash transaction valued at $4 billion. Shareholders of eOne will receive $6.86 for each share. Hasbro expects to maintain its quarterly dividend during the purchase.

Brian Goldner, Hasbro chairman and chief executive officer said the acquisition will provide a pipeline of new brand creation driven by family-oriented storytelling. The company said it will leverage eOne’s entertainment capabilities to bring Hasbro brands to screens globally.

“Hasbro’s portfolio of integrated toy, game and consumer products, will further fuel the tremendous success we’ve achieved at eOne,” said Darren Throop, chief executive officer of eOne. Throop said eOne will continue bolstered by the access to Hasbro’s IP and merchandising strength, while also providing Hasbro with access to talent and production capabilities.

Hasbro listed its reasons for the purchase as:

Strategic Rationale

  • The acquisition of highly profitable and merchandisable preschool brands is a strategic growth opportunity for Hasbro in the Infant and Preschool category, the largest super-category in the toy and game industry in the G11 markets, according to the NPD Group
  • Peppa Pig is an evergreen property that has thrived for over a decade and extended itself to new profit streams that continue its success
  • PJ Masks growth outlook is supported by new formats, its current rollout in China, the launch of new seasons in multiple regions, a live touring event and new toy lines
  • A slate of additional brands is under development, including Ricky Zoom, a unique storyline with highly merchandisable content airing on Nickelodeon in the US and other top-tier global networks beginning Sept. 9, 2019

Adding exceptional, proven TV and film expertise

  • By developing, owning and strategically distributing content, the acquisition positions Hasbro to capture more franchise economics created and perpetuated by differentiated platforms
  • eOne brings profitable, growing capabilities in scripted and unscripted TV development and production for global audiences
  • Live action and animation present multiple avenues to bring Hasbro’s franchises to life as OTT platforms and networks are increasingly interested in new, unexploited intellectual property while studios reclaim content for proprietary platforms
  • In film, eOne has been transforming its business to focus on high-quality premium talent-driven content, including titles like Clifford the Big Red Dog and Monster Problems
  • eOne’s Canadian TV and film operations will continue as a distinct Canadian-controlled business within the combined business

Leveraging talented executive team across all areas of entertainment and strong Canadian presence

  • Top eOne executives have agreed to join the Hasbro team
  • eOne’s seasoned entertainment executives with deep talent relationships and creative drive will further strengthen Hasbro’s talented team
  • Global organization, with presence in London, Los Angeles, Toronto, New York, Hong Kong, Melbourne and Shanghai
  • eOne’s Canadian presence is an important base for creative talent and best-in-class studio capabilities, significantly expanding Hasbro’s Canadian presence and positioning eOne for ongoing success in Canada, including in relation to its robust pipeline of television and film projects
  • The transaction is structured to ensure that eOne’s Canadian operations will continue to meet applicable Canadian control regulatory requirements in relation to television and film production companies, to the continued benefit of the Canadian television and film production industry

Financial Benefits

  • Hasbro expects to realize in-sourcing and other global annual run rate synergies of approximately US$130 million by 2022, driven by integration benefits, substantial savings from moving a significant portion of eOne’s toy business in-house and enhancing the profitability of eOne’s licensing and merchandising activities
  • The addition of eOne to Hasbro is expected to be accretive to adjusted EPS in the first year following the transaction, adjusted to exclude one-time transaction costs and purchased intangible amortization, with mid- to high-teens accretion to adjusted EPS in the third full year following the closing of the transaction as synergies are achieved (1)
  • Meaningful potential for additional revenue growth and expanded franchise economics with brand-driven animation and live action TV and film entertainment

The press release.

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