Hasbro Inc. said late Thursday it has agreed to buy Entertainment One Ltd. in an all-cash $4 billion deal.
Entertainment One, or eOne, is the Canadian company behind preschool brands Peppa Pig and PJ Masks as well as other content, film distribution and music operations. Top eOne executives have agreed to become Hasbro employees, the toy maker said.
Hasbro HAS, -1.00% shares fell more than 4% after the announcement, after ending the regular trading day down 1%.
“With eOne’s content creation capabilities across TV and film, we can reach audiences on all screens, from major distributors to broadcast and cable to new media platforms, including streaming. It fuels experiences with Hasbro brands across the fan economy,” Hasbro Chief Executive Brian Goldner said in a call with analysts after the deal was announced.
The acquisition also “improves our growth outlook and enhances long-term profitability through clearly identified in-sourcing and cost synergies, as well as revenue growth opportunities,” he said.
Hasbro said it expects to gain about $130 million through in-sourcing and other “synergies” by 2022, and that the acquisition would add to Hasbro’s adjusted profit in its first year following its close. Hasbro plans to bring in-house eOne preschool brands’ toy and game licensing programs.
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The deal is expected to close in the fourth quarter. Hasbro will suspend its share-buyback program but keep dividend payments, it said.
Earlier this week, Hasbro said it was phasing out plastic from its packaging starting next year. Last month, the company reported second-quarter earnings that were well above Wall Street expectations, thanks in part to “strong growth” for its brands during Amazon.com Inc.’s AMZN, -0.98% Prime Day event.
Shares of Hasbro have gained 41% this year, compared with gains of 17% and 12% for the S&P SPX, -0.05% index and the Dow Jones Industrial Average DJIA, +0.19% .
