Hasbro Buyout of eOne Under Investigation

It was due to be one of the most significant buyouts in entertainment rights, including music, this year.

Yet toy giant Hasbro’s $4bn cash (cash!) acquisition of Entertainment One – home to records/management/publishing outfit, eOne Music – is now under investigation by the UK’s anti-competitive watchdog.

The Competition and Markets Authority (CMA) has announced today (November 21) that it is inviting comments from interested parties (including rival companies) to determine whether the deal warrants a full scale review.

The deadline for the CMA to announced its decision as to whether to refer the buyout for a ‘Phase 2 investigation’ is January 21 next year.

Hasbro previously told shareholders that it expected to close the eOne buyout during Q4 2019, but that now looks to be an impossibility.

In a statement, the CMA said: “The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

Entertainment One Ltd is registered as a company in the United Kingdom.

eOne’s music assets include Death Row Records, home to classic albums from the likes of Snoop Dogg, Dr. Dre and Tupac Shakur (pictured).

It also owns the likes of Dualtone Music Group (home to The Lumineers’ catalog) and Last Gang Entertainment, in addition to controlling catalog recordings from Brandy, Wu Tang Clan, Chuck Berry and more.

In addition, eOne Music acquired UK-based production music house, Audio Network, for approximately $215m in April this year.

That, at prevailing exchange rate, was worth GBP £165m, which, in turn, represented a 17-times multiple on Audio Network’s annual operating income (£9.62m) in 2018, according to the British company’s latest annual filings.

In 2018, according to eOne’s latest annual report – prior to its Audio Network acquisition – eOne Music turned over £64.4 million ($78.7m).

That comprised just 6.8% of eOne’s company-wide total FY revenue of £941.2m ($1.15bn). Source: MBW