Three-Way Contest to Acquire HIT Ent.
Created 04/03/2005 - 23:00
The takeover of HIT Entertainment Plc. has turned into a three-way bidding war, with Classic Media and Lions Gate Entertainment Corp. vying against Apax Partners, to purchase the kids producer/distributor based in London.
HIT, the producer of the children's shows BOB THE BUILDER and BARNEY, recommended (March 21, 2005) to its shareholders a $917 million offer from private equity firm Apax Partners. Since then it received unsolicited approaches by Lions Gate, the Canadian film company that released worldwide FAHRENHEIT 9/11 and has a family-oriented home entertainment unit, as well as by Classic Media, the New York City-based rights holder to well-known characters such as MR. MAGOO, ROCKY & BULLWINKLE, CASPER, plus owner of Big Idea Prods., animation producer of THE VEGGIETALES.
HIT said in a regulatory statement to the London Stock Exchange, Whilst HIT is investigating these approaches, their preliminary nature means that there can be no assurance that they will lead to a further offer for the company.
The interest has driven up shares in the producer more than 11%.
Lions Gate, which releases videos featuring BARBIE and CLIFFORD THE BIG RED DOG, has requested access to financial information from HIT as it considers whether to make a formal bid.
The company issued a profit warning last summer after a major retailer, reportedly Wal-Mart Stores Inc., cut shelf space for product featuring its characters and it lost a key contract with U.S. cable channel Nickelodeon. HIT fired its chief executive and reported a 24% drop in revenue in the six months ended Jan. 31, from weaknesses in the U.S. home video licensing and retailing.
The Apax bid was already facing a potential block from HIT's second-largest shareholder, Dutch investment company Talpa Capital BV, which holds a 12% stake, which claimed the offer was too low, according to an ASSOCIATED PRESS report.