Nelvana adds Klutz books to kids shelf

Deal inked for $74 million

NEW YORK — In the wake of buoyant year-end financials and heightened attention to its merchandising business, Toronto-based entertainment company Nelvana has acquired U.S. children’s publishing house Klutz for $74 million.

Deal gives Nelvana complete ownership of the privately held California-based Klutz, which is best known for its “Books Plus” series — project-themed books packaged with tool components for 6- to 12-year-olds. The acquisition drives the proportion of Nelvana’s consumer products business from 20% to 50% of overall operations.

Of the total payout, $63 million will be in cash at the deal’s May 1 close, $6 million in subordinated notes to Klutz’s three shareholders, and $5 million in Nelvana subordinate voting shares, which Nelvana says it plans to make available via a public offering in the second quarter of this year.

Klutz prexy and CEO John Cassidy will retain his title and continue to oversee operations at the company’s Palo Alto office as part of a multiyear contract with Nelvana. He is also expected to be elected to Nelvana’s board of directors.

According to execs, Klutz will remain separate from Nelvana’s own Kids Can Press, which publishes titles based on Nelvana’s television and licensed properties. Nelvana plans to extend its brands by piggybacking Kids Can efforts on Klutz merchandise, taking advantage of Klutz’s specialty-store distribution reach.

In turn, Nelvana “will use its preschool expertise to market Klutz products,” said chief financial officer and senior VP of finance Sally Moyer Kent.

Nelvana has 23 shows on U.S. television, including the top-rated kidfare “Franklin” and “Little Bear” airing on Nick Jr.; “Babar,” “George and Martha,” and “Pippi Longstocking” on HBO; and “Rolie Polie Olie” on the Disney Channel.

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