Hasbro unveils sale of film and TV unit, sending shares higher
Investing.com — Hasbro Inc (NASDAQ:HAS) shares climbed on Thursday after the company announced that it would divest its film and TV unit to refocus its operations on toys and games.
In a statement released on the same day as its second-quarter earnings, the Rhode Island-based company said it had reached a definitive agreement to sell its eOne division to media group Lions Gate Entertainment (NYSE:LGFa) for about $500 million. The transaction consists of $375M in cash, subject to certain purchase price adjustments and the assumption by Lions Gate of production financing loans.
Describing it as the «culmination of a rigorous sale process,» Hasbro said the move represents a «significant milestone» in its commitment to increasing investment in its priority toy and board game brands.
“This sale fully aligns with our strategy, and we are pleased to bring the process to a successful close,” said Hasbro Chief Executive Officer Chris Cocks said in a statement.
"[T]his announcement is consistent with our expectations, but should be welcomed news (in our opinion) for investors, as we believe the divestiture leads to higher cash flow generation and earnings power for the [business]," analysts at Stifel wrote in a note. Elsewhere on Thursday, Hasbro posted second-quarter revenue that beat estimates.
But it flagged that sales are now forecast to drop by 3% to 6% in 2023, down from its prior estimate for a decline in the low single digits. Entertainment revenue in particular is seen slipping by 25% to 30%, reflecting the challenges Hasbro faces from production halts caused by the strike of Hollywood actors and writers. The estimates assume that eOne will be included in the entire fiscal year period, Hasbro stated, noting that the
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