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eOne reacts to $450m share ‘rout’

Transatlantic producer and distributor Entertainment One (eOne) has attempted to calm investors after the firm’s market value plummeted by around £300m (US$450m) amid fears about debt refinancing and the profitability of its movie business.

Peppa Pig

eOne took a controlling stake in kids’ property Peppa Pig

The firm, which has offices in Toronto, LA and London, saw its share price drop by 20% yesterday and around 15% the day before after investors baulked at the cost of refinancing its debt. Since July, its share price has more than halved.

“eOne has been routed,” Alex DeGroote, a media analyst at broker and advisory firm Peel Hunt, told C21. “The market is expressing its genuine concern over the future of the company. If its share price falls below £1 I could see it becoming an acquisition target.”

eOne attempted to calm fears in a statement to the London Stock Exchange that said it noted “the movement in its share price and can confirm that the company continues to trade in line with full-year group underlying earnings expectations.” In early trading, eOne’s shares were up by 9%.

Since last year the firm has been pursuing a strategy to double in size and bought a controlling stake in hit children’s title Peppa Pig from the brand’s co-owner Astley Baker Davies in September.

It also shelled out US$132.6m for a majority stake in Grey’s Anatomy producer The Mark Gordon Company, following recent acquisitions including Paperny Entertainment and Force Four Entertainment.

However, the Peppa Pig agreement, priced at £140m and funded by a £193.6m rights issue, was followed by a £285m refinancing deal that cost more than some analysts had expected, leading to growth predictions for the firm being slashed.

The firm’s half-year results, revealed in November, showed its TV production and sales revenue had risen by nearly 80% to £81.6m, but its film division’s revenue fell by 14%.

The Walking Dead, Hell on Wheels and Book of Negroes prodco had also reshuffled its board in July after London-based Marwyn Value Investors sold a 9% stake in the business. It subsequently sold its remaining 17.9% stake in September.

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