(Reuters) - Peppa Pig-owner Entertainment One's (L:ETO) shares rose more than 30% to a record high on Friday, surpassing the price agreed by the company's board with U.S. toy maker Hasbro Inc (O:HAS) in a sign that investors see some chance of a counter offer.
The boards of the two companies said on Thursday that they had agreed a price of roughly $4 billion (3.27 billion pounds) in cash for the deal, which gives Hasbro access to Entertainment One's lucrative shows aimed at infants and preschoolers.
Under the deal, Entertainment One's shareholders will receive 560 pence per share, representing a premium of 26.4% to Thursday's close. Entertainment One's shares rose to as much as 579 pence on Friday.
"Given the nature of the current content cycle where there are a number of emerging large new entrants and platforms alongside several large incumbents, we would not rule out a competing bid for eOne," RBC analysts, who raised their price target for Entertainment One, said.
The buyout offer comes months after eOne denied reports that award-winning producer Mark Gordon would leave the company and said he will continue to develop and produce content for the company following a multi-year production deal.
Entertainment One, which started life as a Canadian record and tape retailer, reported a 21% rise in annual underlying core earnings to 198 million pounds in May, driven by growth in family and brands business as well as higher margins in its film, television and music unit.
The company had rejected a 1 billion-pound takeover offer from British commercial broadcaster ITV (L:ITV) in 2016, saying it undervalued the production and distribution company.
"For Hasbro to buy Entertainment One for the Family & Brands division makes a lot of sense, adding Peppa Pig, PJ Masks and the newer Ricky Zoom brands to its licensing portfolio," Fiona Orford Williams (NYSE:WMB), Director, Media Analyst, Edison Group, said.
"It is much less clear how the film, TV and music division fits in the enlarged group."
Entertainment One's shares were 29.5% higher at 574 pence at 0729 GMT, at the top of London's midcap index (FTMC). ITV's shares were also 3.9% higher, taking second spot on the bluechip index (FTSE).