30th Sep 2015 08:36
LONDON (Alliance News) - Entertainment One Ltd on Wednesday said it has agree to buy 70% of 'Peppa Pig' producer and creator Astley Baker Davies Ltd, which it will fund through a significantly discounted rights issue to raise GBP193.6 million.
Entertainment One said it plans to raise the GBP195.3 million by way of a 4 for 9 rights issue of around 131.5 million new shares at a price of 153.0 pence, a 44% discount to its closing price of 272.0p Tuesday. Shares in the company were down 8.7% Wednesday morning at 248.39p, by far the biggest faller on the FTSE 250, having touched a low of 239.28p earlier in the session.
Astley Baker Davies jointly holds the ownership rights to the 'Peppa Pig' franchise, a big growth driver for Entertainment One. The company said that through this acquisition it will increase its interest in the related share of the earnings from 'Peppa Pig' to 85% from 50%.
The company said that in the year to end-March it accrued GBP17 million in royalties payable to Astley Baker Davies, and by virtue of the acquisition, an equivalent royalty expense will not be accrued in relation to Peppa Pig in its financial statements going forward, although it will make distributions to the minority shareholders of Astley Baker Davies.
Entertainment One said that its largest shareholder, Canada Pension Plan Investment Board, has confirmed it is fully supportive of the acquisition and rights issue.
"Peppa Pig has become a worldwide success and reflects the strength of our ten-year partnership working with ABD. Already the number one pre-school property in the UK, Australia, Spain, Mexico and Brazil, and a leader in other territories around the world, the growth opportunities for Peppa Pig are significant," said Chief Executive Officer Darren Throop in a statement.
Elsewhere the company reiterated its outlook for the full year, continuing to expect underlying earnings in line with its expectations. It anticipates its first half earnings will meet its expectations, as a strong performance in television has offset a weaker than expected performance in film.
Entertainment One will announce its results for the half year to end-September on November 17.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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