Hasbro Inc. (NASDAQ:HAS) activist Ancora Holdings is said to have taken a 1% stake in the toymaker and is supportive of the other activist investor who has been waging a proxy battle.
Ancora is support of fellow activist Alta Fox and believes the company should refresh its board with some Alta Fox nominees, according to a letter sent to Hasbro’s board, a copy of which was viewed by Seeking Alpha. Ancora also wants the company to pursue a partial or full sale of Entertainment One, the unit Hasbro acquired for more than $4 billon in 2019 that’s focused on content product.
“We contend Hasbro’s venture into content production has been an abject failure with extremely limited long-term potential and substantial execution risk,” Ancora CEO Frank DiSanto and President James Chadwick wrote in the letter. “It is clear to us – and apparently many of our fellow shareholders – that eOne is a non-synergistic business that is capital-intensive, low margin and very volatile.”
Hasbro could potentially recoup up to $2 billion through sale of eOne and gain “meaningful” future tax benefits associated with the acknowledged loss, Ancora argued in the letter.
The Ancora letter comes as Alta Fox, which has a 2.5% stake in Hasbro, is trying to replace Chairman Richard Stoddart and two other directors. Alta Fox started its campaign in February and wants the company to company to spin off of its Wizards of the Coast and Digital Gaming unit. Hasbro (HAS) has rejected these proposals after abortive attempts to reach a resolution.
Ancora, which said its initial approach to Hasbro last month received no response from the board, also believes Hasbro (HAS) should consider a potential spin off of the WOTC unit. Ancora sees Hasbro’s shares trading at a 75% discount to the toymaker’s intrinsic value and wants the company to keep up with competitor Mattel (MAT) and others in the gaming and entertainment worlds.
Alta Fox’s proxy battle with Hasbro (HAS) is set to be decided next month when shareholders vote at the company’s annual meeting.
The news was earlier reported by the WSJ.
Ancora has kept busy on the activist front in in recent months, most notably in a campaign targeting department store chain Kohl’s.