Hasbro Inc. not only buys Peppa Pig for its $ 4 billion acquisition of Entertainment One. According to MKM Partners, content authoring and other valuable resources are also added.
and Entertainment One
ETO, + 31.94%
announced the deal late Thursday. Hasbro expects $ 1
USA. Hasbro is the world's largest toy manufacturer by market capitalization and the third largest by sales. Entertainment One, a UK-listed company, generated annual sales of £ 941.2m in the 2019 financial year.
Peppa Pig generated $ 1.35 billion in retail sales in fiscal 2019 and $ 1.15 billion in PJ Masks. MKM believes that both brands, especially in China, have room for growth.
Entertainment One's television and film division can help to increase content production and collaborate with film studios and broadcasters.
"In our view, the proposed $ 4 billion acquisition of Entertainment One has the attractive dual purpose of expanding the company's portfolio of proprietary IP assets while expanding media production capacity at a time when The demand for franchiseable, global content is becoming ever greater, "wrote Eric Handler of MKM.
MKM rates the purchase of Hasbro stock with a target price of $ 126.
See: Opinion: Rich parents continue to behave poorly to lure their children into college.
"[T] The acquisition strengthens the competitive position of Hasbro in the pre-school category," which according to Stifel represents a significant market for the company
There are also "opportunities to create value with acquired brands by adding the toy business of Entertainment One is relocated to their own home, "said the Drew Crum analysts.
With this latest acquisition, Stifel is considering a Mattel Inc. / Hasbro deal is "an unlikely event, at least in the next few years."
Stifel rates Habro stock with a target price of $ 107.
reduced its quarterly losses in the last quarter and reported sales of $ 860 million. Shares fell 6.5% on Friday after announcement of the transaction. The Mattel share fell by more than 37.8% last year.
The Hasbro share also fell 8.5% on Friday, although this stock has risen 4.7% in the last 12 months.
Entertainment One share the other The price rose 32% on Friday, exceeding the purchase price of £ 5.60 per share. This stock has risen 60% over the past year.
The S & P 500 Index
increased 1% over the previous year.
Do Not Miss: Foreign Buyers Grab UK PLC
While SunTrust analyst Robinson Humphrey, like other research groups, estimates the value of the Hasbro / Entertainment One deal, they also see potential negative results.
"[T] The transaction is not without its potential risks, as Hasbro paid a healthy multiple and gained significant leverage at a time when balance sheets are being scrutinized," says a SunTrust note.
SunTrust rated Hasbro Hold Shares with a target price of $ 118.