New offers threaten to scupper Hit takeover

Apax Partners’ planned £490m takeover of Hit Entertainment isn’t going ahead without a fight – at least two companies are understood to be drawing up separate counter-offers for the Bob the Builder and Barney firm.

US/Canada-based film and television distributor Lions Gate Entertainment is planning to knock out Apax’s bid with an offer than could be tabled as early as this week, an offer that is expected to take the bidding over the £500m mark.

The identity of the second new bidder is unknown, although it is thought that it may have come from a trade buyer in partnership with a private equity backer. A rep from Netherlands-based Talpa Capital, the investment vehicle owned by Big Brother creator John De Mol, this morning denied that the firm was involved in the latest offers.

Just last week, de Mol told Apax Partners and Hit chairman Peter Orton that in exchange for selling up his 12% stake in Hit, as per the original Apax bid, he wants digital rights to Hit’s entire slate of toons inside Belgium and Holland.

Meanwhile, Lions Gate, which holds character licences to the likes of Barbie and the Care Bears, issued a statement today confirming that it has “requested access to due diligence information from Hit Entertainment because it is considering making an offer for Hit.”

Hit also confirmed it had “received two unsolicited early-stage approaches and requests for information” from other possible buyers, but said their “preliminary nature means that there can be no assurance that they will lead to a further offer.” Despite the possible higher bids, Hit is going ahead with its recommended proposals for the cash acquisition of Hit by Apax’s Sunshine Acquisition within the next few days.

The “aggressive” bid from Lions Gate follows a meeting between executives from Apax and Lions Gate chief exec Jon Feltheimer a month ago on a potential joint bid, sources told The Sunday Times. When Apax rebuffed the offer, Feltheimer made it clear that Lions Gate would go it alone.

A deal between Lions Gate and Hit would make sense due to the similarities between the two companies portfolios, which in Hit’s side includes Barney the Dinosaur and Bob the Builder and Lion’s Gate’s includes Clifford the Big Red Dog, Barbie and Inspector Gadget. Lion’s Gate is slightly larger than Hit, with a market value of around $1.13bn.

Hit’s shares closed on Friday at 2993/4p. Hit’s board is expected to meet today. Investors who have backed the Apax offer include Orton, directors Mike Luckwell, Steven Ruffini, Charles Caminada and Nigel Birrell, as well as Deutsche Asset Management, DC Thomson & Company, Rosemary Leach and Sheryl Leach, which together hold some 35.5% of Hit shares.