Entertainment One acquisition of DHX grounded
It looks like Canadian conglom Entertainment One’s deal to purchase fellow Canuck producer and distributor DHX Media, parent company of Decode Entertainment, Halifax Films and Studio B Productions, is off.
The initial US$63.2-million deal was announced on September 29 and was slated to close this December. Both parties appear to be pointing the finger at each other for the failure to complete the transaction. DHX, in a statement to the London Stock Exchange, said Entertainment One’s lenders ‘will not consent to the Proposed Transaction if it provides DHX shareholders with the option to elect to receive cash as partial consideration for their common shares of DHX…The consent of Entertainment One’s senior lenders was a condition of closing of the Proposed Transaction.’ In other words, DHX contends that the cash payout option was a part of the original acquisition agreement and could not proceed without that provision.
For its part Entertainment One says it ‘requested from DHX an extension for completion of the Proposed Transaction beyond 31 January 2009 [deadline], but this request was rejected by DHX. The Company proposed revised terms to the Proposed Transaction to DHX, but these terms were rejected by DHX.’
With a four-year, US$150 million credit facility secured, Entertainment One is proceeding with a direct listing on the Toronto Stock Exchange, which had been a chief motivator for the acquisition of DHX, already listed on the TSE.