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Hasbro inks agreement to acquire Entertainment One for $4B

Hasbro Inc. agreed to acquire Canadian multinational mass media and entertainment company Entertainment One Ltd. in an all-cash transaction valued at approximately $4.0 billion, or £3.3 billion.

Entertainment One shareholders will receive £5.60 in cash for each common share of the company.

The transaction is expected to close during the fourth quarter.

"By combining two profitable and financially disciplined companies we expect to unlock value in the short- and long-term for our stakeholders," Hasbro's CFO Deborah Thomas said in an Aug. 22 company release.

"[Entertainment] One's brands and TV and film expertise, together with Hasbro's brands, toy and game innovation and licensing capabilities, positions us to more quickly drive revenue and profit over the medium-term. We remain committed to maintaining an investment-grade rating and returning to our gross Debt to EBITDA target of 2.00 to 2.50X," Thomas said.

Hasbro anticipates financing the transaction with the proceeds of debt financing and approximately $1.0 billion to $1.25 billion in cash from equity financing. Hasbro entered into a debt commitment letter with Bank of America Merrill Lynch to provide a 364-day senior unsecured bridge loan facility to secure funding of the purchase price.

The transaction has been approved by the boards of the two companies and is subject to receipt of certain regulatory approvals, the approval of Entertainment One shareholders and the Ontario Superior Court of Justice, as well as other customary closing conditions. Entertainment One is also subject to customary nonsolicitation provisions under the definitive agreement and a termination fee payable to Hasbro in certain circumstances.

Centerview Partners LLC is financial adviser to Hasbro, and Cravath Swaine & Moore LLP, Stikeman Elliott LLP and Freshfields Bruckhaus Deringer LLP are its legal counsel. JP Morgan Cazenove is financial adviser to eOne, while Osler Hoskin & Harcourt LLP and Mayer Brown International LLP are its legal counsel.