Hasbro acquires Entertainment One by adding brands and developing the story via Global Entertainment

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PAWTUCKET, R.I. & LONDON – (BUSINESS WIRE– Hasbro, Inc. (NASDAQ: HAS) and Entertainment One Ltd. (LSE: ETO) (eOne) announced today that it has entered into a definitive contract under which Hasbro will acquire eOne in a cash-only transaction worth approximately £ 3.3 billion or 4 billion. 0 billion US dollars. Under the terms of this agreement, eOne shareholders will receive £ 5.30 in cash for each eOne common share, representing a 31% premium on the 30-day volume weighted average price (VWAP) of eOne effective August 22, 2019.

"The acquisition of eOne adds well-known, history-based global family brands that generate strong operating revenues for Hasbro's portfolio and provide a portfolio of new brands based on storytelling." family-oriented, which will now include Hasbro's intellectual property, "says Brian Goldner, President of Hasbro and Chief Executive Officer. "In addition, Hasbro will leverage eOne's immersive entertainment capabilities to bring our portfolio of brands that attract players, fans and families to every screen in the world and realize the franchise's economy across the globe." our strategy for shareholders. We are delighted to welcome talented eOne employees from around the world to the Hasbro family. "

"On behalf of the eOne Board of Directors, I am very pleased with this exciting development, which demonstrates eOne's vision, leadership and strong leadership performance. This transaction creates immediate and meaningful value for our shareholders by recognizing the strength of our forward-looking business model, "said Allan Leighton, Chairman of the Board of eOne.

"Hasbro's portfolio of integrated products for toys, games and consumer products will fuel the tremendous success of eOne," said Darren Throop, CEO of eOne. "There is a strong cultural fit between our two companies. The declared mission of eOne is to unleash the power and value of creativity that matches Hasbro's goals. EOne teams will continue to do what they do best with access to Hasbro's rich portfolio of creative and merchandising products. In addition, Hasbro's increased presence in Canada, resulting from eOne's deep roots, will bring Hasbro world-class production capabilities and capabilities. With our management team, I look forward to working with Hasbro on our common growth and success for many years. "

"By combining two profitable and financially disciplined companies, we hope to unlock value in the short and long term for our stakeholders," said Deborah Thomas, Hasbro's Chief Financial Officer. "EOne's expertise in brands, television and film, combined with Hasbro's brands, toy and gaming innovation and licensing, enables us to generate revenue and profits faster." medium term. We remain committed to maintaining an investment grade rating and returning to our gross debt target relative to EBITDA of 2.00 to 2.50X. "

The acquisition will strengthen Hasbro's position as a leading gaming and entertainment company, adding beloved global brands with proven success and strong financial performance across all platforms of Hasbro's strong portfolio. EOne's ability to deliver high quality content across all platforms will strengthen Hasbro's end-to-end ability to monetize and commercialize intellectual property rights in new and increasingly attractive formats, including over-the-shelf platforms. -the-top (OTT) and premium, music, geolocation, etc. entertainment based, AR and VR.

Strategic justification

Enhances Hasbro's portfolio of brands with two beloved global brands and an attractive portfolio of brands under development

  • The acquisition of highly profitable and marketable preschool brands is a strategic growth opportunity for Hasbro in the infants and preschoolers category, the largest super-category in the toy and gaming industry in the US G11, according to the NPD Group.

  • Peppa Pig is an evergreen property that has been flourishing for more than a decade and has expanded to new sources of profit that continue to be successful.

  • PJ Masks' growth prospects are supported by new formats, its current roll-out in China, the launch of new seasons in several regions, a live tour event and new toy lines.

  • A series of additional brands is under development, including Ricky Zoom, a unique plot with highly marketable content being broadcast on Nickelodeon in the United States and other leading global networks as of September 9, 2019.

Add exceptional and proven expertise to television and movies

  • By strategically developing, owning and distributing content, the acquisition allows Hasbro to better capture the economy of the franchise created and perpetuated by differentiated platforms.

  • eOne Offers Increased and Cost-Effective Capabilities of Developing and Producing Television with and Without Script for a Global Audience

  • Live action and animation provide many opportunities to bring Hasbro franchises to life, as OTT platforms and networks are increasingly interested in untapped new intellectual property, while studios are recovering content. for proprietary platforms.

  • In the film business, eOne has transformed its business to focus on high-quality, talent-driven content, including titles such as Clifford the big red dog and Monster Problems

  • EOne's Canadian television and film business will continue to be a separate Canadian-controlled business within the combined company.

Leverage a talented management team in all areas of entertainment and a strong Canadian presence

  • The eOne leaders have agreed to join the Hasbro team

  • Experienced eOne executives, with deep talented relationships and creative drive, will further strengthen Hasbro's talented team.

  • World Organization, present in London, Los Angeles, Toronto, New York, Hong Kong, Melbourne and Shanghai

  • EOne's Canadian presence provides an important foundation for creative talent and studio capabilities, significantly strengthening Hasbro's Canadian presence and positioning eOne for success in Canada, particularly with respect to its strong investment portfolio. television and film projects.

  • The transaction is structured to ensure that eOne's Canadian operations will continue to meet Canadian regulatory control requirements for film and television production companies, for the continued benefit of the Canadian television and film production industry.

Financial benefits

Creates opportunities to accelerate profitable long-term growth

  • Hasbro expects to realize internal synergies and other global synergies regarding annual operating rates of approximately $ 130 million by 2022, thanks to the benefits of integration. , to the substantial savings resulting from the transfer of a significant portion of the eOne toys business and to the improvement of the profitability of licensing and merchandising of eOne. activities

  • The addition of eOne to Hasbro is expected to have a accretive effect on adjusted EPS in the first year after the transaction, adjusted to exclude non-recurring transaction costs and acquired intangible amortization, with a medium / high ratio. level to achieve Adjusted EPS for the third full year. year following conclusion of the transaction when synergies are realized (1)

  • Significant potential for revenue growth and expanded franchise savings with live entertainment and shows and live movies

  1. Hasbro can not, without unreasonable effort, anticipate certain elements necessary to develop a meaningful financial measure comparable to GAAP under Adjusted EPS. See "Use of Non-GAAP Financial Measures" below for further discussion.

details of the transaction

The cash purchase price of £ 5.60 per share represents a premium of 31% over the 30-day volume weighted average price (VWAP) of eOne effective August 22, 2019.

Hasbro plans to finance the deal with proceeds from debt financing and about $ 1.0 billion to $ 1.25 billion in cash from equity financing. Hasbro has signed a debt engagement letter with Bank of America Merrill Lynch to provide a 364-day senior unsecured bridge credit facility to secure financing of the purchase price.

Hasbro is committed to maintaining an investment grade rating. Hasbro's long-term leverage objective remains unchanged at between 2.00 and 2.50 times the debt / EBITDA ratio, and is expected to return to this range in three to four years.

Hasbro plans to maintain its quarterly dividend and suspend its current share repurchase program while prioritizing the achievement of its leverage goal.

The transaction, which is structured as a plan of arrangement under the Canada Business Corporations Act, has been approved by the boards of directors of Hasbro and eOne and is subject to certain regulatory approvals, approval by shareholders of eOne and Ontario Superior Court of Justice and other customary closing conditions. eOne is subject to the usual non-solicitation provisions of the Final Agreement and termination fees payable to Hasbro in certain circumstances. The transaction is expected to close in the fourth quarter of 2019.

The Board of Directors of eOne, having consulted with its financial advisors as to the financial terms of the transaction and its legal advisers, unanimously decided that the transaction was in the best interest of eOne and recommended to the shareholders of eOne to vote in favor of the transaction. . The Board of Directors of JPO received a notice of fairness from JPO Cazenove in the transaction stating that, as of the date of this notice, and subject to the assumptions, limitations, qualifications and other considerations, the consideration: being paid to the shareholders of eOne is fair, from a financial point of view, for these shareholders.

Centerview Partners LLC acts as financial advisor to Hasbro and Cravath, Swaine & Moore LLP, Stikeman Elliott LLP and Freshfields Bruckhaus Deringer LLP are the legal advisers. J.P. Morgan Cazenove is a financial advisor to eOne and Osler, Hoskin & Harcourt LLP and Mayer Brown International LLP are the legal advisors.

A copy of the Final Agreement will be available on the eOne website at www.entertainmentone.com and with Hasbro's filings with the US Securities and Exchange Commission.

Investor appeal details

The two companies will hold a conference call with investors today, August 22 at 5 pm AND.

To listen to the live webcast and access slides from the accompanying presentation, go to https://investor.hasbro.com. The retransmission of the call will be available on the Hasbro website approximately 2 hours after the end of the call.

The numbers to dial for the call are 877-269-7756 (US) and 201-689-7817 (INTL). Please indicate that you are calling for the Hasbro teleconference. Please log in 5 to 10 minutes before the start of the call.

About Hasbro

Hasbro (NASDAQ: HAS) is an international gaming and entertainment company committed to creating the best gaming experiences in the world. From toys to games to TV, movies, digital games and consumer products, Hasbro offers the public many ways to discover its iconic brands, including NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, MONOPOLY, BABY ALIVE, MAGIC: THE GATHERING and POWER RANGERS, as well as top-notch partner brands. Through its entertainment brands, Allspark Pictures and Allspark Animation, Hasbro is developing its brands globally with beautiful stories and content on every screen. Hasbro is committed to making the world a better place for children and their families through corporate social responsibility and philanthropy. Hasbro has been rated # 13 in the Top 100 Corporate Citizens in 2019 by CR Magazine and has been named one of the Most Ethical Companies in the World® by the Ethisphere Institute in the last eight years years. Learn more at www.hasbro.com and follow us on Twitter (@Hasbro) and Instagram (@Hasbro).

About Entertainment One

Entertainment One Ltd. (LSE: ETO) is a global independent studio specializing in the development, acquisition, production, financing, distribution and sale of entertainment content. Entertainment One's diverse expertise extends to the production and sale of films, television and music channels, family programming, merchandising and licensing, as well as digital content. With a global reach and breadth, powered by in-depth knowledge of the local market, Entertainment One offers the best content in the world.

Entertainment One's strong network includes international feature film company Sierra / Affinity; Amblin Partners with DreamWorks Studios, Participant Media and Reliance Entertainment; Makeready with Brad Weston; the unscripted television production companies Whiz Kid Entertainment and Renegade 83; live animators Round Room Entertainment; the world-class music labels Dualtone Music Group and Last Gang; and the award-winning emerging studio of Secret Location content and technology.

IMPORTANT NOTICE:

Not to publish, publish or distribute in, in or from any jurisdiction where this would constitute a violation of the relevant laws or regulations of that jurisdiction.

Certain information contained in this announcement would have been privileged information (within the meaning of Article 7 of the Royal Decree) prior to their publication as part of this announcement. The person responsible for disseminating this information on behalf of Entertainment One is Edward Parry.

The UK city code on acquisitions and mergers does not apply to Entertainment One because its head office is located in Canada..

Forward-looking statements

Certain statements in this press release contain "forward-looking statements" regarding Hasbro and Entertainment One within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be accompanied by the terms "anticipate", "believe", "may" , "estimate", "expect", "expect", "intend", "may", "plan", "potential", "project", "target", "will" and other words and terms of similar meaning. Among other things, these forward-looking statements include expectations regarding the proposed acquisition of Entertainment One by Hasbro; Hasbro's beliefs about value creation as a result of the proposed acquisition; the timetable planned to finalize the acquisition; benefits and synergies of the transaction; expected financial impact; dividend policy; future opportunities for the combined company; deleveraging plans, including the schedule of measures taken to reduce indebtedness and credit ratings and Hasbro's outlook. The actual shares or results of Hasbro may differ materially from those anticipated or anticipated in the forward-looking statements because of known and unknown risks and uncertainties. Specific factors that may cause such a difference include, but are not limited to: uncertainty as to whether the transaction will be completed on time or at all; the conditions precedent to the completion of the transaction, including the approval of Entertainment One's shareholders and the ability to obtain applicable regulatory approvals within the required timeframe or at all or as required; uncertainty as to Hasbro's ability to achieve the benefits and synergies expected from the transaction and to successfully integrate Entertainment One's business on time or to a lesser extent; risks of unexpected costs, liabilities or delays; integration difficulties, including the ability to retain key personnel; Hasbro's ability to provide financing on satisfactory terms; Hasbro's debt, including any additional debt that may be incurred in connection with the transaction; the risks and uncertainties related to the gaming and entertainment industries, including the retail landscape, distribution channels, consumer preferences, the application of tariffs on Hasbro products and other factors affect or modify Hasbro's plans, strategies and anticipated business objectives; the effect of the announcement, the holding on or the completion of the transaction on customers, employees, suppliers, partners and results of operations; and other risks detailed from time to time in Hasbro's filings with the US Securities and Exchange Commission ("SEC"). The statements contained in this document are based on the current beliefs and expectations of Hasbro and Entertainment One and are valid only as of the date of this press release. Unless required by law, neither Hasbro nor Entertainment One assumes any obligation to change the forward-looking statements contained in this press release or to update them to reflect events or circumstances subsequent to the date of this news release. this press release. You should not place undue reliance on forward-looking statements.

No forecast or profit estimate

No statement in this press release should be or should be construed as a forecast or estimate of profit.

No offer or solicitation

This press release is provided for informational purposes only and does not constitute an offer to sell, an invitation to subscribe for, purchase or exchange any securities, or the solicitation to vote or approve in any jurisdiction that it or, no sale, issue, exchange or transfer of the securities referred to in this press release in any country that contravenes applicable laws.

Use of non-GAAP financial measures

In this press release, Hasbro includes certain forward-looking non-GAAP financial measures as defined in the SEC rules. These non-GAAP forward-looking financial measures reflect management's current expectations and beliefs regarding the potential benefits of the proposed transaction. Hasbro is not in a position to reconcile the non-GAAP forward-looking measures with the measures presented without unreasonable efforts, as it is impossible to predict with reasonable certainty the actual impact or timing of the transactions. elements likely to affect comparability. These items include business optimization, restructuring and currency fluctuations, as well as other non-monetary and unusual items that it is difficult to predict in advance for those items. include in a GAAP estimate. This is due to the unpredictable and uncontrollable nature of these reconciling elements, which would require an unreasonable forecasting effort, and we believe that the range of projected values ​​would be so vast that it would make no sense for the investors. These non-GAAP measures should be considered in addition to, and not in excess of, net income or other measures of financial performance prepared in accordance with GAAP, as further detailed in Hasbro's financial statements. and documents filed with the SEC. As used herein, the term "GAAP" refers to generally accepted accounting principles in the United States of America.

Warning

JP Morgan Securities plc (UK-based investment bank JP Morgan Cazenove) ("JP Morgan Cazenove"), licensed in the United Kingdom by the Prudential Regulation Authority ("PRA") ) and regulated in the United Kingdom by PRA and the Financial Conduct Authority, acts as financial advisor exclusively for eOne and no one else with respect to the matters set forth in this notice and will not consider any other person as its client with respect to the matters set forth in this notice and eOne can not be responsible for the protections provided to customers of JP Morgan Cazenove or its affiliates or any advice it gives regarding the matters referred to herein.

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