Muddy puddles

23 Aug 2019 By Antony Currie Follow @AntonyMCurrie

Hasbro has found juicy slabs of fat to cut to justify the $4 bln it is paying to buy UK studio Entertainment One, home to the porcine cartoon character. The U.S. toymaker is also larding up on debt and diluting shareholders for the deal. That could leave it stuck in some mud.

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Hasbro said on Aug. 22 it has agreed to buy Entertainment One for 5.60 British pounds a share, or about 2.8 billion pounds ($3.4 billion), a roughly 26% premium to its last closing price. Including net debt, the enterprise value of the deal for the owner of Peppa Pig and PJ Masks is around $4 billion.

The U.S. toymaker intends to sell new shares to cover between $1 billion and $1.25 billion of the purchase price and will borrow the rest. Hasbro will keep paying its dividend but is suspending share repurchases until its gross debt falls below its leverage target of 2.5 times EBITDA, which it expects will take three to four years.

Hasbro shares fell 4%, to $109.80, in after-hours trading in New York.

Centerview is advising Hasbro and JPMorgan Cazenove is advising Entertainment One.

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Hasbro shares fell 4%, to $109.80, in after-hours trading in New York.

Centerview is advising Hasbro and JPMorgan Cazenove is advising Entertainment One.

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