LONDON — Peter Orton on Monday sold Hit Entertainment to U.K. venture capitalists Apax Partners for £489 million ($934 million), nine years after he took it public on the London stock market.
The decision to sell follows a difficult 18 months for the pre-school specialist, best known for “Bob the Builder,” “Barney” and “Thomas the Tank Engine.”
“It’s a sad day, obviously, but the competition is very tough out there, and this is a good deal for shareholders,” said Hit chairman Orton, who owns 6% of the company. “The transition from VHS to DVD has proved difficult in the children’s market. Retailers are keen to fill shelves with DVDs, but parents don’t seem to want to change, partly because they already have kids’ videos.”
Hit is on the verge of launching a U.S. digital kids’ channel in partnership with Comcast, PBS and Sesame Workshops.
In October, Hit fired CEO Rob Lawes following a profits warning when Wal-Mart cut the number of Hit products on its shelves.
Orton and new CEO Charles Burdick will end their involvement with the outfit once the deal is complete, but chief operating officer Charles Caminada, finance director Steve Ruffini and director of corporate development Nigel Birrell will stay on.
Recently, several U.S. studios, including Disney, expressed interest in Hit, but no one could match Apax’s offer.
Rumors of a takeover emerged late last week. The Apax deal is a 20% premium on Thursday’s closing price of Hit shares on the London stock market.
Apax media specialist Paul Fitzsimons said Hit was “uniquely positioned” in the global pre-school children’s entertainment market.
Orton founded Hit 16 years ago with just £300,000 ($573,000).
Apax, whose execs include former London Merrill Lynch media analyst Neil Blackley, reportedly is about to buy a U.K. retail outlet for Hit products after making a $1.6 billion approach to the Woolworths chain of stores.