Shares in Peppa Pig owner Entertainment One have jumped by almost 20% despite the firm denying reports it had been approached about a takeover by ITV.
Bloomberg reported overnight that ITV had held preliminary talks with the Canadian company, which also distributed Oscar-winning film Spotlight. The company is currently trading at a value of more than £800m.
Entertainment One issued a statement on Thursday saying: “Entertainment One notes the press speculation regarding a potential offer. No approach has been received by eOne.”
The London-based company bought a 70% stake in the British firm that originally created Peppa Pig, Astley Baker Davies, in September for £140m, and controls 85% of rights to the franchise. The deal netted Peppa Pig creators Mark Baker, Neville Astley and Phil Davies £42m each.
However, in March this year eOne reported disappointing financial results due to the poor performance of box-office releases such as biopic Steve Jobs. The results came after a difficult year for the company in which it had to raise an additonal £285m in debt and invest heavily in content ahead of its release.
As a result, its shares have fallen by more than 50% over the last year, making it a more appealing takeover target.
ITV has been aggressively expanding its production capacity in a bid to reduce its reliance on the advertising market, and last year paid £355m to acquire The Voice maker Talpa. Its production arm, ITV Studios, saw revenues rise 33% to £1.2bn last year.
Investment banking firm Jeffries said an acquisition of eOne by ITV would be “strategic and opportunistic”.
“It would diversify ITV’s business away from advertising revenues,” said analyst Lisa Hau. “This would fuel ITV’s next phase of growth as a content player which is attractively positioned given the anticipated consolidation in the European media space led by distributors and telcos.”
