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Merrill Lynch to Advise on HIT Sale

The sale of HIT Entertainment could be nearing. Apax Partners has hired Bank of America Merrill Lynch to advise on the buyout of the U.K.-based entertainment company, which holds the rights to Bob the Builder, Thomas the Tank Engine, Fireman Sam and Angel

The sale of HIT Entertainment could be nearing. Apax Partners has hired Bank of America Merrill Lynch to advise on the buyout of the U.K.-based entertainment company, which holds the rights to Bob the Builder, Thomas the Tank Engine, Fireman Sam and Angelina Ballerina.

Last month, Apax, HIT's private equity owner, reported a price tag of $1.5 billion (£950 million) for the company, a figure that represents the level of interest not just from media groups such as Disney and Viacom, but also toy companies like Mattel and Hasbro.

Talks of HIT being acquired began as early as December 2009, as reported by License! Global, which cited a number of potential buyers, including Comcast, Nickelodeon, Disney, Hasbro, Fremantle, Classic Media, Saban and Endemol.

Apax acquired HIT for £489.4 million ($781.3 million) in May 2005. Earlier this year, it was forced to write down £325 million ($519 million) of HIT's value in order to secure an agreement with lenders. The write-down saw HIT record a pre-tax loss of £361 million ($576 million) for the year to July 2009, but won Apax an extension of its credit facilities until June 2012. It also agreed to pay higher interest on its £356 million ($568 million) of remaining debt.

Fisher-Price's Thomas and Friends toys have been performing very well since their launch last year and sales of Thomas merchandise are reported to be up 50 percent this year in the U.S. Perhaps even more significant for potential buyers, Thomas is now the No. 1 Western preschool toy in China and Japan. Fireman Sam has also begun to see strong international performance.

HIT also owns a 30 percent stake in digital cable television channel PBS Sprout, which could prove attractive to bidders.

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