UPDATE 2-Activist Livermore calls for strategic change at Entertainment One

Wed Jan 20, 2016 1:02pm EST
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(Adds Wednesday share move, background on CPPIB pension fund stake, paragraphs 8, 14)

By John Tilak

TORONTO Jan 20 (Reuters) - U.S. activist hedge fund Livermore Partners is calling on Canadian and UK media firm Entertainment One to slow down its pace of dealmaking and improve its cash flow, the fund's top executive said.

Livermore could also push the TV and film content and distribution company into a sale of the entire business if the fund does not see a reversal in strategy within the next 12 months, Livermore Managing Director David Neuhauser said.

Based in Toronto with its shares listed in London, Entertainment One has announced a string of acquisitions and joint ventures in recent years. EOne, as the brand is known, also revealed plans last year to acquire a majority stake in Astley Baker Davies, producer of the popular preschool franchise Peppa Pig.

The company has been rapidly growing its revenue, but some investors and analysts have been getting concerned that it might be putting sales growth ahead of profits and debt management.

Livermore recently bought a stake in the company and has begun engaging with some top executives. Last week, Neuhauser wrote to Darren Throop, chief executive of Entertainment One.

"The equity looks dislocated from the recent moves you have exercised to further your hold on the Peppa Pig franchise and its global growth potential," he said in a copy of the letter seen by Reuters.

Entertainment One's high-profile partnerships in recent years include those with DreamWorks Studios and production company Mark Gordon Co.   Continued...