Entertainment One completes placing to acquire Mark Gordon Company
Entertainment One, the film and television producer and distributor, confirmed that it had raised £53m in an placing with City institutions at a price of 305p as part of its plan to snap up the remaining half of US television producer The Mark Gordon Company.
The new cash, received when shares are admitted on Thursday 1 February, will go towards a total acquisition payment of $209m, made up of $160m cash and $49m of shares issued to Mark Gordon. The remainder of the cash will be financed by issuing new corporate bonds, the company said when it first announced the deal overnight.
Buying up the 49% of MGC that it does not already own is expected to boost eOne's earnings 2% in its first full year of ownership and the purchase price represents a takeover multiple of just under nine times consensus EBITDA.
In the 2017 financial year, with 51% of MGC owned by eOne, the studio's revenue surged to £119.9m from £14.6m in 2016, growing 721%. In the six months ended 30 September 2017, MGC's unaudited revenue grew 82% to £51.6m, with unaudited underlying EBITDA up 10% to £9.9m.
The placing price represents a discount of 2.3% to the closing price on 29 January, with the net placing price after costs of roughly 297p to be received by the company. The placing shares being issued represent approximately 4.0% of eOne's previous total issued share capital.
Directors believe the acquisition "will further strengthen the company's position as a leading global content business" as it moves its operating structure to unify its film and television operations into a single division, which is hoped will double the size of the group in the five years to 2020. Last year to March adjusted profit before tax swelled 25% but one-off charges from the reshaping of the film business meant reported profit before tax shrank 23% to £37m.
At November's interims adjusted PBT improved 53% to reach £36m as a strong showing from the family and television units offset a weaker performance from film, with chief executive Darren Throop saying with 82% of the full year's expected TV margin already committed or greenlit and film continuing to focus investment on new partnerships, the group was on track to hit full year targets.
MGC is currently in production on several established TV series including 'Ray Donovan' for US TV network Showtime, 'Grey's Anatomy' for the ABC network, 'Criminal Minds' for CBS, and also serves as the lead studio for the 'Designated Survivor' series starring Kiefer Sutherland and a pilot for 'Las Reinas' in production for ABC.
Commenting on the acquisition on Monday, Throop said it was "an exciting time" for both parties "and a natural step in our strategy of creating and owning high quality content".
"We would like to welcome Mark Gordon into his new and expanded role with eOne and look forward to seeing our Television and Film operations continue to make great progress under his leadership."