Entertainment One Share Discussion Threads

[1gw] 22/8/2016 13:39

Well yes, but they might want to be confident of finalising something before they fix the date of the AGM. The ideal would probably be to announce a deal just before the AGM so that they can talk through the deal with interested parties (shareholders, analysts, journalists) at the AGM and events that would be scheduled around the AGM. That doesn't mean having the deal done before the announcement of the AGM date but it does mean having a credible path to finalising the deal before the AGM.

This appears to be how Arris and Pace played it with their takeover/merger, which was announced the evening before the Pace AGM. And I note in passing that Allan Leighton was the non-exec chairman of Pace.

[raffles the gentleman thug] 22/8/2016 13:23

I imagine they will announce the date any day now 1gw. Whether they are in talks or not, they will still need to approve the accounts etc

[1gw] 22/8/2016 10:23

I wonder when we should start to read something into the non-appearance of an AGM notice? Probably a bit early yet, but if nothing out this week then it is going to feel like it is being delayed for some reason. Last year the notice came out on 18th August (AGM on 16/9) and the year before on 14th August (AGM on 11/9).

[raffles the gentleman thug] 22/8/2016 08:41

I wouldn't be so sure myself. It all depends on what one considers the wording "strong strategic rationale and would further accelerate ITV's rebalancing of the business" is worth to them, and I suspect that's worth a bit more than 11x or 12x earnings, especially when borrowing rates are this low.

But I too am with you salpara111, in that if an agreement isn't reached I am more than happy to remain a shareholder at this price

[rivaldo] 22/8/2016 08:39

Good info and articles whilst I've been on hols, cheers all.

I believe ITV will increase their bid, and if they do then that should kick off a competitive bidding scenario which should only benefit us shareholders.

This year should be a good one for ETO given the recovery in the Film division and the continued growth of Peppa, PJ Masks, Ben & Holly etc, so I can see the share price doing pretty well by itself. But if a bidder were to offer 280p-300p now then I wouldn't turn down a bird in the hand.

[salpara111] 22/8/2016 08:30

As a shareholder I don't think that ITV will go to 285p and as the company is not in any sort of trouble I still think the odds are in favour of them remaining independent....unless there is some genuine third party interest and my issue with that is the fact that no bidder really wants all of the business and as such takes on extra risk and complexity in terms of trying to carve it up and sell the bits it doesn't want.
Peppa was not fully exploited in the past due to the limited financial power of the majority owner. Now that ETO is in charge they can use their financial leverage to really exploit the brand globally.
In short I am happy to remain independent as I feel the share price will be over £3 next year.

[neilsy] 21/8/2016 20:22

Great debut for Eye in the sky at #2 in the UK dvd charts.

[cautious7] 21/8/2016 19:21

Cheers Nelly, but "demand," and what you get can be three totally different outcomes,FACT

[raffles the gentleman thug] 21/8/2016 09:23

Nice one neilsy much appreciated

[gilesy911] 21/8/2016 09:15

Thank you Neilsy

[neilsy] 21/8/2016 09:05

eOne shareholder demands higher take-out price from ITV
ITV logo
Credit: Lynne Cameron/Press Association

Christopher Williams, Chief Business Correspondent

20 August 2016 • 7:30pm

One of Entertainment One’s (eOne’s) biggest shareholders has demanded that for takeover talks to begin, ITV must increase its proposal for the Peppa Pig maker by at least a fifth, after its initial approach was immediately knocked back.

The top-10 investor told The Sunday Telegraph that City institutions would not accept a valuation below the 330p- per-share price they paid for eOne shares in a placing last summer. Adjusting for a rights issue in September last year, that means top shareholders want at least 284p per share, compared with ITV’s proposal at 236p.

They could also hold out for a premium, pushing the valuation of eOne including debt towards £1.5bn. The investor, a fund manager, said: “Even though it is not that exposed to Brexit, ITV may have felt eOne was vulnerable after the referendum.

“But they need to start talking fair value. They are a long way away from that at the moment.”

ITV’s opening gambit was rejected immediately by the eOne board as undervaluing the company.

The shares of eOne, a film and television company, have been trading a long way short of the price last summer, following a rights issue, refinancing and poor performance at the box office.
Peppa Pig scene
ITV must increase its proposal for the Peppa Pig maker by at least a fifth, said a top eOne investor

Other City sources suggested 284p might be ambitious, as the refinancing and weaker trading have weighed on expectations for eOne. The top-10 investor criticised the company for “failing to communicate how the business works properly” to the City, but said it was improving its communication and backed the company’s entrepreneurial chief executive, Darren Throop, to deliver long-term growth.

The fund manager said: “If you were building this company today, you probably would put film distribution and TV production together. But that’s a function of the way it has been built up by Darren, and if you hold the shares, you are invested in him.”

ITV wants to add eOne businesses including Peppa Pig and the Mark Gordon Company to its stable of TV production assets, which chief executive Adam Crozier has built up to reduce its vulnerability to fluctuations in the UK advertising market.

There has been speculation it would seek to carve off and sell on eOne’s cinema distribution business, although its only statement on its takeover proposal referred to global distribution as a draw.

ITV has not made a formal offer, however, and could walk away without formally withdrawing.

The private-equity firm KKR has been named as a potential rival bidder. Allan Leighton, eOne’s chairman, has strong links to the media sector and could seek to get an auction going. He worked with Mr Crozier at Royal Mail.

Both ITV and eOne declined to comment.

[gilesy911] 19/8/2016 14:47

I wish the BBC could be for sale!!!! Glad for that to be broken up

[raffles the gentleman thug] 19/8/2016 14:43

Article out suggesting that ITV might themselves be bid for and broken up, by a combination of RTL and Liberty, which I think is complete fantasy.

[gilesy911] 19/8/2016 14:19

Nice jump just then !!!

[gilesy911] 19/8/2016 11:11

I will be interesting what the papers might say this weekend

[raffles the gentleman thug] 19/8/2016 10:59

Volumes now desperate in ETO. Practically impossible to buy without market impact - everyone sitting and waiting

[raffles the gentleman thug] 19/8/2016 10:23

Well there is no arbitrage trade, since no shares are being exchanged, so its hard to argue downside for ITV. In theory their shares should go higher since it is blatantly obviously accretive for them - if say they pay £1.4bn in total EV then you are looking at about £60m in incremental finance costs (assuming they restructure the ETO debt) and for that they are getting over £140m in pre-tax adjusted for minorities. So its accretive all the way up to 300p without giving them any credit whatsoever for synergies.

Obviously if they can sweat ETO's poorly performing billion dollar rights catalogue, then you are laughing. Real back of the envelope stuff but if lets say they lift internal content from 45% to 55% then they could be on for saving £50m plus in content acquisition which they would otherwise be paying away to independents.

Capture both elements and ITV could accrete EPS next year by as much as 2p a share, which obviously must start a decent rerating of the shares. Plus there is the intangible aspect of whether reduced cyclicality helps to improve the rating the market is prepared to pay for it, since ETO should immediately lift non advertising earnings from around 25% to 35%.

My guess continues to be ITV offer a final 280p a share and clinch it, on the basis they will offer continuity to the business. As 1gw wisely pointed out you can bet Allan Leighton will be playing a big role to try to make this happen.

[tini5] 19/8/2016 09:48

Good article thanks. What's the thinking for ITV's share price if a bid is agreed? Normally the purchaser's share price dips but this seems a different prospect?

I'm holding both.

[raffles the gentleman thug] 19/8/2016 09:45

This is an old article but one I don't think has been posted before, which gives one some confidence that ITV will pay up for ETO:


ITV can pay more for a slice of Peppa Pig
By Carol Ryan August 10, 2016

ITV can probably fork out more for a slice of Peppa Pig. Canada’s Entertainment One, which owns a stake in the children’s hit TV show, rejected a 1 billion pound approach from the UK broadcaster. The target is well positioned for the shift towards digital content. And ponying up more would help ITV to diversify away from the UK.

The broadcaster’s 236 pence per share proposal represents an 8.5 percent premium to Entertainment One’s Aug. 9 closing share price. But it’s over 50 percent higher than the group’s mid-April share price, when talk of an approach first surfaced.

The problem is, Entertainment One reckons it’s worth a lot more. Shareholders may be holding out for three pounds per share or more, according to Liberum analysts. The mooted ITV offer does look cheap considering the Canadians’ content library alone was independently valued at $1 billion last year.

Stripping out the 15 percent of Peppa Pig that Entertainment One doesn’t own gives an operating profit of around 141 million pounds for this year. Even without any synergies, the current 1 billion pound price tag would bag ITV a 9 percent return on investment after tax. It could comfortably go to 1.3 billion pounds and still get a 7 percent return, not factoring in the likely growth of digital content revenue.

ITV is trying to reduce its dependence on advertising revenue, which was flat in the first half of the year at 838 million pounds. It has been buying up content, most recently purchasing producer of reality show The Voice Talpa Media. Entertainment One would give it greater access to the U.S. market, thanks to hit shows like Grey’s Anatomy, and to the booming scripted drama genre.

The Canadian group is also nicely exposed to the shift towards digital content. Supplying subscription-based platforms like Netflix, Amazon Prime and Hulu brings in around a quarter of all sales. Entertainment One’s shareholders can hold out for a better price.

[tromso1] 18/8/2016 23:19

Stock Watch

"Entertainment One was in focus as it announced a deal to buy the remaining 50 per cent it doesn’t already own of digital studio Secret Location.

The deal comes as blue-chip ITV and US private equity firm KKR weigh £1billion-plus takeover bids for Entertainment One, the producer of Peppa Pig.

City sources reckon ITV will soon submit a revised takeover proposal of up to 280p a share after an offer of 236p per share was rejected by Entertainment One, whose shares ticked up 2.7 per cent yesterday, or 6.6p to 249.1p."

[raffles the gentleman thug] 18/8/2016 18:42

Correct me if I am wrong but I was pretty sure they had an ADR listed on the NYSE

[masurenguy] 18/8/2016 18:22

"given that ITV has the US quotation"

Do they ? I'm totally unaware of a dual US listing - which US stock market maintains an ITV listing?

[1gw] 18/8/2016 16:47

I would have thought it would be a 7am (UK) job unless the market gets wind of something and forces an immediate statement. Also I would be surprised if Allan Leighton wasn't fairly close to the situation - so I don't think Throop will be calling all the shots on the ETO side.

[raffles the gentleman thug] 18/8/2016 16:40

Presumably when there is an announcement it can only come pre-market rather than post market given ITV has the US quotation ??