Shares in Canada's Entertainment One (ENTMF) rose on Wednesday after it announced it had received, and rejected, a £1.03 billion ($1.3 billion) bid from the U.K.'s leading commercial terrestrial TV broadcaster, ITV. (ITVPY)
The London-listed, Toronto-based target is a media rights and content producer, whose assets include the children's Peppa Pig franchise. It said ITV had made a "preliminary proposal" worth 236 pence per share.
"The board of eOne has reviewed the proposal and has unanimously rejected it on the basis that it fundamentally undervalues the Company and its prospects," it said.
Entertainment One shares were recently up 6.7% at 232 pence.
ITV itself gave no indication of whether it will lift its bid.
"We suspect it will not although there is some rationale for a combination of the assets," noted Liberum analysts, who have a buy recommendation on the stock.
An ITV spokesman declined to comment on its next move.
In a statement, ITV said its bid represented a premium of 41% to Entertainment One's average share price in the month to July 11, when talk of a bid resurfaced, and is 19.3% more than Tuesday's closing price.
"The proposal is subject to normal diligence and any transaction would require board approval and customary other approvals," it said. "ITV also reserves the right to withdraw, vary or amend the proposal, in whole or in part, at any time. There can be no certainty that any transaction will ultimately take place, nor as to the terms on or structure by which any such transaction might be constituted."
