Reports coming from the UK swirling around the US$1.5-billion valuation and planned sale of HIT Entertainment have been confirmed by a source close to the situation. HIT owner Apax is planning to announce the appointment of an investment bank, either UBS or Bank of America Merrill Lynch, to handle the sales process within the next week.

US-based kids entertainment giants Disney, Hasbro, Mattel and Viacom have all taken a preliminary kick at the tires, driven by their interest in acquiring HIT’s top property Thomas the Tank Engine whose merchandise sales have shot up by 50% this year thanks in large part to a master toy deal with Mattel’s Fisher-Price and a surge in popularity in Asia, particularly China and Japan. Unspecified Asian buyers have also expressed interest.

Apax is looking to sell HIT as a whole, rather than sell off individual properties. It was recently valued at holding US$1.5 billion in equity, excluding the roughly US$568 million (or £356 million) in debt remaining from Apax’s £489.4 million purchase of HIT in May 2005.

Thomas’ strong performance in the preschool boys merch market, arguably something the big four are missing in their own IP portfolios, along with HIT’s 30% stake in US digital channel PBS Sprout and a new crop of promising properties like Mike the Knight are making a more compelling case for what may be perceived as an overly high valuation.

It has not been determined whether the sale will be handled out of the US or the UK. Once one of the banks is appointed, it will be charged with officially engaging interested parties on behalf of Apax.