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.