Peppa Pig – Official Channel/YouTube
Hasbro investors aren’t sure about Peppa Pig.
Shares of the largest public toymaker slid more than 7% in early trading Friday after the company announced Thursday that it would purchase Entertainment One for $4 billion. Entertainment One produces content for adults and children — its lineup includes Peppa Pig, PJ Masks, and Ricky Zoom, three popular cartoon franchises for infants and toddlers.
If the deal goes through, it would expand Hasbro’s portfolio to new, younger viewers. Other brands that Hasbro owns include Monopoly, Transformers, and My Little Pony.
“Peppa Pig, PJ Masks and other brands in development are highly profitable and merchandisable,” said Brian Goldner, the CEO of Hasbro, on a call with analysts. “These brands have many of the characteristics and profitability of our franchise brands.”
The acquisition could help boost Hasbro’s earnings, writes Theron Mohammed of Business Insider. Entertainment One’s earnings have outpaced Hasbro’s in recent years – in March 2017, Entertainment One’s operating income increased 14%, while Hasbro’s declined in 2018.
Going forward, Entertainment One is expected to grow sales by more than 10% multiple years in a row, while Hasbro’s sales growth is expected to slow. Hasbro hopes to boost its adjusted earnings-per-share by 14% to 19% after three years from the deal.
Shares of Hasbro are up 35% year-to-date.
Markets Insider