ITV decides not to jump for Peppa Pig maker
ITV has scrapped its plan to buy Entertainment One (eOne), the maker of Peppa Pig, after its initial approach was rejected as undervaluing the company.
The broadcaster said it had a “clear view of the value of the business” and that it “appears this value is different to the level at which the board of eOne would currently engage in a more formal process”.
ITV proposed a takeover of eOne at 236p per share a fortnight ago as the latest stage of its plan to bulk up its production business.
As well as Peppa Pig, eOne owns a controlling stake in the Mark Gordon Company, maker of US dramas such as Grey’s Anatomy and Ray Donovan, and distributes the Hunger Games films.
The approach, which valued eOne at £1.2bn including debt, was promptly rebuffed, however. Some of the company’s major shareholders acquired stakes last year at prices much higher than 236p per share. The Daily Telegraph reported demands from one top investor that ITV increases its bid to around 284p per share, 20pc more than it proposed.
ITV said: “ITV continues to believe in the strategic logic and potential benefits of acquiring eOne but has a clear view of the value of the business, recognising that this value would need to be verified by appropriate due diligence. It appears this value is different to the level at which the board of eOne would currently engage in a more formal process.”
While eOne required a higher bid to open formal talks, it is understood ITV faced tough questions from its shareholders over the takeover. While it is building a production business, most of eOne’s revenues are from low-margin cinema distribution. There were also questions over the Canadian-based company’s use of tax credits and how they would be affected by ITV ownership.
ITV told investors it had a “clear strategy to build a stronger, more diversified international business”. Shares in eOne tumbled 14.2pc on ITV’s withdrawal, to 215.1p. ITV’s own shares firmed 1p to 202.8p.
‘ITV’s view of the value of the business appears to be different to that at which eOne’s board would engage’