SHARES in Entertainment One leapt by up to 25 per cent yesterday after the Peppa Pig owner confirmed it was mulling a sale, adding almost £75m to the company’s market capitalisation.
Entertainment One said yesterday it was “considering its strategic options... in response to interest it has received from various parties”.
Though a spokesperson for the firm said that reports naming Disney and Viacom as potential bidders were “plucked out of the air”, analysts said a large US trade buyer would be the best fit for the group, whose revenue streams cover film, television and music distribution rights.
“Entertainment One would be best suited within a big US media company that will make continued investment in its content rights,” said Patrick Yau at Peel Hunt.
Private equity is also likely to be interested, though management may be sceptical, as its a model that has proved less successful in the past. Other names being linked with a possible bid include Sony, Alliance Films, Lionsgate and even NewsCorp, though Entertainment One insisted discussions were “very preliminary” and that there were no bids on the table.
Analysts said the rumoured price of £400m would be “reasonable”. That values the company at around £2.15 per share, a 30 per cent premium to its closing price on Tuesday, before bid rumours began.
MEET THE ADVISERS
FOR advice on its strategic review, which many expect to result in the sale of the company before the end of 2011, Entertainment One has turned to man of the moment Harry Hampson, European telecoms and media investment banking chief at JP Morgan.
Canadian-born Hampson has made quite the splash in the media world over the past couple of years, first coming to mainstream prominence when he acted for Bertelsmann, whose RTL Group sold Channel 5 to Richard Desmond for £248m in July 2010.
But its Hampson’s work for NewsCorp that’s really raised his profile in recent months, after he advised Rupert Murdoch on the acquisition of his daughter Elisabeth’s independent television production company, Shine, completed in April this year.
Hampson then took a key role for NewsCorp on its ultimately doomed bid for the remainder of BSkyB shares, which was abandoned in mid-July during the height of the phone hacking scandal but could be revived once investigations are completed.
Away from the office, Hampson is part owner of Italian restaurant Osteria dell'Arancio on Chelsea’s King’s Road. He is joined on the Entertainment One account by David Harvey-Evers.
Also helping the Peppa Pig owner conduct its strategic review is Credit Suisse, led by head of media investment banking Alastair Blackman.
Blackman, with colleagues Indy Bhattacharyya and Stuart Field, also advised digital sports media group Perform on its London initial public offering in April.
Credit Suisse’s Joe Hannon is also advising.