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4Kids Reports 3rd Party is Interested in Acquiring It (Updated)

posted on 2010-05-10 12:30 EDT
Third party interested in acquiring licensing firm at a premium, but no deal yet

The 4Kids Entertainment licensing and broadcasting company has announced in its 2010 First Quarter financial results on Monday "that it had received a non-binding indication of interest from a third party to acquire 4Kids." According to 4Kids, the third party expressed interest in acquiring the company for a premium over the market capitalization of its common stock. However, 4Kids cautioned that there is no assurance that a deal will go through.

4Kids had retained the financial advisor Montgomery & Co. to help evaluate its strategic alternatives in 2009. The company's Special Committee of the Board of Directors was planning to consider options "including, but not limited to, asset sales, alliances with strategic partners, and/or a sale of the Company through a merger or other corporate transaction."

For the three months ending on March 31, 4Kids announced net revenues of US$4.2 million, compared to US$9.3 million in the same period in 2009. Its net loss was US$3.5 million, compared to US$2.0 million in the same period in 2009. 4Kids acknowledged that it faces delisting from the New York Stock Exchange since its market capitalization has been below the US$15 million minimum that it must maintain.

The company's stock price closed on Friday at US$1.10, but it hit a high of US$1.25 on Monday morning before settling at US$1.15 as of 12:20 p.m. EDT. Its current market capitalization is roughly US$15.62 million.

In the past, 4Kids adapted Pokémon, One Piece, Tokyo Mew Mew, Kirby: Right Back At Ya!, Shaman King, Sonic X, and other anime titles for the North American market. Its current properties include Yu-Gi-Oh!, Dinosaur King, and Tai Chi Chasers (Tai Chi Senjimon) from Japan, as well as the card-game-based Chaotic franchise from Denmark.

Thanks to dynasore for the news tip.

Update: Prescott Group Capital Management reported in a mandated U.S. Securities and Exchange Commission filing on April 30 that it acquired 2,414,209 shares of 4Kids Entertainment. These shares represents 18% of the outstanding shares of 4Kids' common stock. According to Prescott, 4Kids is "undervalued and represented an attractive investment opportunity." However, Prescott added that the investment was "not made for the purpose of acquiring control" of 4Kids. Source: DealFlow Media


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