Private Equity News & Analysis

More miss than hit: Apax exits entertainment group

Apax has brought its troubled investment in Thomas the Tank Engine rights-owner HIT Entertainment to a close after selling it to Mattel for $680m – less than it paid for the business in 2005.

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Apax sold HIT Entertainment to Mattel after a protracted auction process, run by Bank of America Merrill Lynch, that began in March. Toy manufacturer Tomy is understood to have been amongst the interested parties.

Mattel, which already makes Thomas the Tank Engine toys under licence through its Fisher-Price unit, paid $680 million for the company.

Apax acquired HIT in 2005 for £489 million ($779 million at today’s exchange rate), but was forced to write its investment in the business down to zero last year after struggling to refinance the company’s debt. Apax declined to comment on the quantum of its loss on the investment.

A source close to the firm said Apax had done well to recoup some of its investment through the sale, despite booking a loss overall.

RBC Capital Markets and Latham & Watkins advised Mattel on the acquisition, while Bank of America Merrill Lynch and Weil Gotshal & Manges advised HIT and Apax.