KKR eyeing possible bid for Entertainment One, ITV ponders higher offer

Entertainment One had caught the eye of US private equity outfit KKR, which is considering a bid, Bloomberg reported citing people familiar with the matter.

For its part, The Mail on Sunday reported that ITV might be willing to pay up to 280p a share or almost £1.2bn for Entertainment One.

The reports came after Entertainment One´s decision to rebuff a 236p-a share offer from UK broadcaster ITV during the previous week.

However, KKR had not yet reached a final determination and might still decide against such course of action, the same people told the newswire. Similarly, it was not clear when ITV would submit an improved offer.

One of Bloomberg´s sources also said KKR was keen to expand its footprint in the media and entertainment space.

Shares of Entertainment One edged lower by 0.33% on 12 August, finishing at 238.80p, giving the owner of the Peppa Pig franchise for pre-schoolers a £1,020.40m market capitalisation.

"The likelihood of a further offer, acceptable to ETO shareholders, is currently unclear.

"[...] There is clearly no certainty a further offer will be made at a higher price, but the bid provides a useful benchmark for valuation purposes. Even at the bid price the shares still trade at a discount to peers, on 9.3x calendar 2016E EV/EBITDA. Our new target price of 236p (previously 225p) is in line with the rejected offer, and is consistent with our previous methodology of a c.15% discount to its peer group," Canaccord Genuity analysts David Amiras and Simon Davies said in a research note sent to clients on 11 August.