Entertainment One’s (eOne) deal to increase its stake in Peppa Pig from 50% to 85% is excellent news, giving it more control over the brand’s international expansion. The £140m consideration values Peppa at £400m and will be funded by way of a £201m rights issue, with the surplus giving eOne greater flexibility to achieve its goal of doubling in size between FY15 and FY20. The strategic benefits of the deal justify the EPS dilution (5% in FY16) and the fall in the share price appears an overreaction, with eOne now only on an FY16e EV/EBITDA of 8.2 times.
