HIT Entertainment, the independent TV production company owned by Apax Partners, has pulled back from making a takeover offer for rival Chorion, leaving the field open to 3i. In a statement issued on Tuesday, HIT said it had ceased negotiations with Chiron and that it would not proceed with a £144m (US$252m) offer for the company.
Chorion controls the IP rights to a range of popular fictional characters and published works, including the literary works of Agatha Christie, Georges Simenon, Enid Blyton, Roger Hargreaves and Raymond Chandler, whose collective output includes fictional detectives Hercule Poirot, Miss Marple and Maigret and children’s brands including Noddy, the Famous Five, Mr Men and Little Miss.
On March 2 2006, Chorion had confirmed that HIT was considering a possible offer for the company, with HIT subsequently undertaking due diligence, but decided not to pursue a bid.
Chorion shares had fallen just under 4% to 423p per share by mid-morning following the announcement, down from Monday’s 445p closing price. Based on that previous close, Chorion had a market capitalisation of £114m. At the end of 2004, the company had sales of £27m, liabilities of £29m and Ebitda of £17m.
HIT stressed, however, that while it would not initiate a takeover and was effectively banned from doing so for six months under takeover rules, it did reserve the right to re-examine that decision in the light of any other bids being made, and could, in the event of a third-party offer being made, announce an offer for Chorion.
As well as interest from HIT, Chorion has already been approached by a management led investor-group, backed-by 3i Group, which plans to launch a tender offer for the business at 425p in cash per share or a total value of £108m plus debt.
HIT itself was bought in 2005 in a £579m (US$1.1bn) take-private buyout by private equity investor Apax Partners.
Chorion is being advised on the approach by investment bank Rothschild. Merrill Lynch advised HIT on its approach. UBS and KPMG are advising the 3i backed MBO consortium.