MUMBAI: DHX Media has signed a definitive agreement to acquire the entertainment division of Iconix Brand Group, which includes both an 80% controlling interest in ‘Peanuts’ and 100% of ‘Strawberry Shortcake’.
The remaining 20 per cent interest in Peanuts will continue to be held by members of the family of Charles M. Schulz.
The total purchase price for this acquisition is $345 million, subject to a customary working capital adjustment, to be paid through a combination of cash on hand, new debt financing facility and a private placement offering of subscription receipts ultimately exchangeable for convertible debentures. The transaction is expected to close on or around 30 June 2017.
“Peanuts is one of the world’s greatest entertainment brands, with a tremendous global legacy of comics, animated content and consumer products reaching back almost 70 years. We are thrilled by the opportunity to welcome Charlie Brown, Snoopy, Lucy, Linus and the entire Peanuts gang into our family of leading kids’ properties, including Teletubbies, Inspector Gadget, Caillou, Degrassi and others,” said DHX Media CEO Dana Landry.
Widow of Charles M. Schulz Jean Schulz commented, “DHX Media feels like a perfect fit for Peanuts. We respect their innovative and rich history with developing children’s shows and brands, and we look forward to working with Dana and his team to steward Peanuts in the future.”
“Over the past ten years, DHX Media has become a global leader in children’s entertainment content, building scale across production, distribution and consumer products and is perfectly positioned to benefit from the incredible growth of streaming services, worldwide.
“Peanuts and Strawberry Shortcake have widespread, evergreen appeal that make them ideal for layering onto this platform, complementing our 450-title library, and significantly increasing our scale in consumer products. These brands are expected to drive meaningful growth across multiple revenue streams, and we look forward to extending their reach to new generations of kids worldwide,” Landry said.
The son of Charles M. Schulz Craig Schulz said, “The Schulz family is thrilled to be partnering with DHX Media, as we have been greatly impressed by their professionalism and expertise. My father’s comic strip and his entire body of work has delighted generations of fans for over 66 years, and we feel confident that DHX Media are the right people to help propel Peanuts into the future.”
Strategic benefits and value creation for DHX Media
o Adds 340+ half-hours of proprietary content to DHX Media’s library, which can feed potential new production including new digital content for YouTube, mobile, and video-on-demand services.
o Creates opportunities to mine an underexploited library for global distribution and expansion into new territories and channels, including our WildBrain network on YouTube.
o Combines two highly complementary family entertainment brands to expand our global portfolio while increasing the scale and breadth of our consumer products business from 19% to 44% of total annual revenue, on a pro forma basis.
o On a pro forma basis, DHX Media revenue would grow 52% to approximately C$443 million, and adjusted EBITDA would rise by 40% to approximately C$134 million. The transaction would be 6-10% accretive to earnings per share and 25-30% accretive to free cash flow per share, on a pro forma basis. Even on a leverage neutral basis, the acquisition would be accretive.
o DHX Media also expects to realise annual cost synergies of C$5 million within the first year post-closing (which relates to 13 per cent of the target trailing 12-month EBITDA), and C$25 million within the first five years.