ITV in deal talks with Peppa Pig owner Entertainment One, no offer made yet

Broadcaster ITV has held takeover talks with Entertainment One, the FTSE 250-listed owner of Peppa Pig and distributor of the new David Brent film, according to reports.

Talks have been exploratory and no final decision has been made, with Entertainment One confirming on Thursday that "no approach has been received".

The Canada-headquartered group's shares have fallen from above 360p last summer to below 140p earlier this year after disappointing refinancings and trading.

But eOne, as it likes to be known, has an impressive slate of international TV production assets, including a part share of US TV production company Mark Gordon, and has partnerships with big film names such as DreamWorks Studios.

ITV has been on an acquisitive spree under chief executive Adam Crozier buying production companies to ease its reliance on broadcast advertising.

Recent purchases by the FTSE 100 group have included UTV Media's television assets for £100m and entertainment show producer Talpa Media for £355m.

Broker Peel Hunt questioned whether ITV would want to retain either the film distribution division, which has been trading weakly, or Peppa Pig, as it might be a good time to sell the kids' programme.

"ITV would certainly add a level of management control and existing cash flows that could resolve some of the issues of ETO's own cash flow profile," analysts noted, in reference to ETO's latest refinancing.

ITV has paid circa 9.5-13.5 times enterprise value for production assets in recent years.

"The TV assets are undoubtedly attractive and ITV could reverse the reputational discount," Peel Hunt added. "For ETO this is a dangerous phase. Whither the share price should ITV take a close look and then not bid."

Shares in ETO were more than 10% higher at 174.39p by 0910 BST on Thursday morning, with ITV's only marginally improved.