Lions Gate Entertainment Corp. has agreed to buy the EOne film and TV studio from toymaker Hasbro Inc. for $375 million in cash plus the assumption of loans.
Hasbro will use proceeds from the deal, valued at $500 million including loans, to pay down debt, the company said in a statement on Thursday, confirming an earlier Bloomberg report. The largest US toymaker separately reported second-quarter revenue of $1.21 billion, beating Wall Street’s expectations. Shares were up 4.1% at 10:05 a.m. in New York.
With the purchase, Santa Monica, California-based Lions Gate stands to gain a library of about 6,500 titles, as well as the rights to develop a Monopoly film. Existing titles include the reality show Naked and Afraid and a distribution arm for popular series such as The Walking Dead.
Hasbro, which gained the popular Peppa Pig kids franchise when it acquired the studio in 2019 for $4 billion, has been selling EOne divisions it doesn’t consider central to its strategy. In 2021, the toymaker sold EOne’s music business to Blackstone Inc. for $385 million.
Chris Cocks, Hasbro’s chief executive officer, said in the statement that the sale would allow the company to “focus on our core toy and game expertise.”
The deal has been approved by both companies’ boards and is expected to close by the end of the year, subject to regulatory approvals. The accord will delay Lions Gate’s planned spinoff of its Starz TV business beyond a September target until closer to year-end, to comply with regulatory processes, people familiar with the deal said previously.
Peppa Pig
EOne generated $829 million in revenue last year, or about 14% of Hasbro’s total. The business was created from the merger of several music distributors and expanded into Hollywood in the 2000s. Recently produced titles include the film The Woman King and the TV series Yellowjackets, which airs on Showtime.
Hasbro’s franchise segment, which is Hasbro’s largest sales driver and now includes Peppa Pig and other brands such as Dungeons & Dragons, saw its net revenue fall in the second quarter by 5% from a year earlier to $788.4 million.
The company expects revenue to decline 3% to 6% this year, in large part due to its entertainment segment, and adjusted earnings to be “approximately flat” with 2022.
Last week, rival Mattel Inc. reported sales and profit that beat analysts’ expectations as the stockpile of unsold products at retailers shrinks. Mattel is expecting a boost from sales of Barbie sales during the remainder of the year on the back of Greta Gerwig’s hit film based on the character.
(Updates share price in second paragraph)
