Hasbro Inc said it is not involved in any talks regarding a potential sale of the company, despite a news report that said it had been in negotiations for a possible leveraged buyout.
The No. 2 toymaker's shares rose as much as 9 percent in premarket trading after the Wall Street Journal reported that it was in early negotiations with Providence Equity Partners to take the company private.
Hasbro confirmed it was approached by a private equity firm regarding a transaction, but it did not name the firm and its board had decided against pursuing it.
A source familiar with the matter told Reuters on Thursday Providence has had talks with the No. 2 U.S. toymaker. Providence was unavailable to comment.
Home to brands such as Playskool, Monopoly, and G.I. Joe , the No. 2 toymaker behind Mattel Inc is also in a joint venture with Discovery Communications Inc to form a new children's television network, The Hub.
The company is also hoping to benefit from the creation of Hasbro Studios, which will produce Habsro-related content for the new network.
Rochdale Securities Hayley Wolff said the toymaker was an attractive target to any company looking for content.
There is intrinsic value in Hasbro that is largely unappreciated. Specifically, the company has a very rich (intellectual property) portfolio, Wolff said.
Buyers are looking for content and Hasbro has roughly a 1000 propriety brands, she said, adding the company's strong free cash flow was another bonus.
Hasbro could also be a good fit for an entertainment company looking for proprietary content. The company also holds licenses to make merchandise tied to upcoming movies such as The First Avenger: Captain America and Spider-Man 4.
Last December, Hasbro also signed a 10-year deal to make and sell toys and games based on characters in the American children's television series Sesame Street.
The approach to Hasbro came as private equity deal flow has increased in a turnaround for a market that hasn't seen large deals since the end of the buyout boom in early 2007.
Earlier this year, a consortium of buyout funds including Blackstone Group LP , TPG Capital and THL Partners tried to buy Fidelity National Information Services Inc for $15 billion. Those talks fell apart late in May over price, but in an encouraging sign for the sector the buyout firms had managed to get financing to support a deal.
Providence Equity Partners Chief Executive Jonathan Nelson told Reuters earlier this month that two other large deals were being talked about. I would put money on the $5 billion to $8 billion categories actually happening, Nelson said in a June 4 interview.
Rhode Island-based Providence is a media and entertainment-focused private equity firm with investments in companies including Spanish-language broadcaster Univision Communications and New York Yankees sports channel YES Network. It was among the companies that bought into Hollywood studio Metro-Goldwyn-Mayer in a $2.85 billion buyout in 2005.
Shares of the Hasbro were up 2 percent at $42 Thursday on the New York Stock Exchange.
(Reporting by Paritosh Bansal and Dhanya Skariachan; Editing by Derek Caney)