Activist investor urges Hasbro to sell Entertainment One

Yahoo Finance Live’s Brian Sozzi discusses activist investor Ancora urging Hasbro to sell its Entertainment One (eOne) unit.

Video Transcript

- Hasbro facing some backlash from its activist investor Ancora, who's now urging the toymaker to sell its Entertainment One unit in a letter to the board of directors. Brian Sozzi has been tracking this story very, very closely. So what's the latest?

BRIAN SOZZI: Going from bad to worse. So Ancora, a well-known activist investor here, not pulling any punches. They also helped attack Kohl's last year. Another punching bag for yours truly. But look, Ancora out here this morning with a really, I would say, a scathing letter to the folks over at Hasbro. It wants a couple of things.

First, they want them to sell their eOne entertainment business. They bought this business in 2019 for more than $4 billion. It has not done that well during the pandemic, of course, due to various-- making movies and all that process was really hurt by the pandemic. So that's a problem. They would also like for Hasbro to initiate a board refresh. And then, also, just look for other-- to evaluate a potential spin-off of Wizards of the Coast. Now, that is something another activist, Alta Fox, has also been pushing Hasbro to do, in addition to [INAUDIBLE], several board members, too, there.

Now, Ancora really came out firing here in this letter. And we have that statement, or a chunk of that letter here, from the folks over at Ancora saying, "We are urging the Board to begin taking decisive action to help the Company keep up with Mattel and other players in the fast-moving gaming and entertainment worlds. This is a message we sought to convey directly and privately, but your investor relations team has yet to respond to our outreach in April." A source tells me that these two companies have not met.

But ultimately, this is going to be resolved one way or another very soon, because there is a June 8 proxy vote coming up here for Hasbro. Likely could be some new board members. But I think the general mood on Wall Street right now is that Hasbro has to give Wall Street some kind of bone. And there you have my take right here. It's about to hit the fan. I did have another word in there too, but the team took it out, and they were probably right to do it.

I'm always fired up very early in the morning. But look, they have to at least potentially look for splitting off Wizards of the Coast. At least acknowledge that this is a possibility. And then the bigger issue here is eOne. This entertainment business that they bought for over $4 billion, it has not lived up to expectations. And just, having covered Hasbro for many, many years, I don't like how that business has been integrated inside of the company.

It seems like an afterthought at this point.

- Top hat was about to hit the fan, was the word that was missing, right?

BRIAN SOZZI: Sure, absolutely.

- Monopoly.

BRIAN SOZZI: Yeah, yeah.

- I mean, when we think about these businesses, for Mattel, for Hasbro, it comes down to the licensing that they can also get for some of the other popular titles that aren't under their brands. What is the sentiment of investors for where they would like to see this net out?

BRIAN SOZZI: I think the investor base wants Hasbro to just be a toy company. It made sense a couple of years ago for them to go out there and buy an entertainment business. The thinking was, they're going to make movies, from those movies you make more toys. That necessarily hasn't happened here. But again, they would be selling this entertainment business at a fire-sale, post-pandemic valuation. But again, something is likely to happen very soon.