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Entertainment Rights - HIT Entertainment receives bid

April 2005

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • ERT
  • Price:
  • 22p
Events this month were dominated by news that rival HIT Entertainment (which owns titles such as Bob the Builder) has received a recommended offer from private equity firm Apax at 300p a share. The offer values HIT at £489m or an exit multiple of 14.7x historical operating profit. Broker, Collins Stewart, has since issued an analysis which when applying the same multiple to Entertainment Rights' historical numbers for 2004, suggests a price target of 23p and applying the same multiple to current year forecast results, suggests a price target of 45p. The broker also points to the key attractions to private equity firms in the children's character licencing business which are the high margins available, strong cashflows and the fact ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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