Activist investor wants Hasbro to spin off Wizards of the Coast
Alta Fox Capital Management is encouraging Hasbro to spin off Wizards of the Coast.
Hasbro is a major entertainment brand that hosts some quite popular intellectual properties. However, an activist investor is looking to make some changes to the company, which could include moving one of these properties. Alta Fox Capital Management has expressed a desire for Hasbro to add to its board and potentially spin off Wizards of the Coast, the creators of Dungeons & Dragons and Magic: The Gathering.
The plans of Alta Fox Capital Management were first reported by the Wall Street Journal. In a letter to shareholders, the activist investor reportedly expressed its desire for Hasbro to make some changes to its board, nominating five candidates to replace members of Hasbro's board. What’s more, the group also encourages Hasbro to reevaluate its brand strategy and shift its business focus. As a part of this initiative, Alta Fox Capital Management proposes that Hasbro spins off Wizards of the Coast.
Wizards of the Coast is the company behind Dungeons & Dragons and Magic: The Gathering, as well as their very lucrative products, merchandise, and games. While on the surface this may seem like a questionable idea, Alta Fox believes that spinning off Wizards of the Coast will increase the company’s stock value by $100. Hasbro’s (HAS) stock closed yesterday in the neighborhood of $97/share.
Alta Fox Capital Management owns a 2.5 percent stake in Hasbro, which is worth $325 million. In a statement to CNBC, Hasbro said that it “engages in regular communication with its shareholders as part of its robust shareholder engagement program and welcomes constructive input.”
Alta Fox Capital Management’s belief that Hasbro could double its share value by spinning off Wizards of the Coast seems quite ambitious, so it will be interesting to see if it sparks any change at the entertainment company. For the most interesting financial stories in the entertainment world, stick with Shacknews.
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replyDonovan Erskine posted a new article, Activist investor wants Hasbro to spin off Wizards of the Coast
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I doubt that will happen. Hasbro had bad experiences doing that in the past. Hasbro might be willing to sell D&D off with a cash offer.
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I don't think I quite understand how spinning off a subsidiary during what is approaching the height of it's popularity helps the parent companies share prices.
WotC has 3 or 4 AA and AAA D&D video games coming out in the next few years, a rumored 5.5e (-esque, since it won't actually be game changing) relaunch soon, a top-ten Twitch channel primarily based around their property, two of the most popular CCGs on the market... Hell WotC was up 24% last year while Hasbro was down 8%. D&D has surged in popularity and hasn't even reach it's height yet.-
Maybe they think it's oversaturated and want to sell while it looks like a great deal. Could be a move to attempt to future-proof Hasbro if they think this is near-peak popularity.
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Valid point, I do think that WotC isn't going to go TOO much higher in the next five years, though I certainly think they won't fall as much as they did before either.
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It's why now is a perfect-looking time to sell IMO (if they ever want to, that is)
Buyer gets a genre-defining IP with numerous projects in the pipeline, and all signs point to certain growth short to mid-term. Seems like a mutually beneficial clean break if there ever is a chance to do so.
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Ding. It's at it's zenith right now. Games like PF2e are increasing in popularity and are going to starting taking more and more market share as 5e moves into their weird 5.5e/6e phase.
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In my experience WotC always felt like a pretty big bargain for them. They don't have a huge amount of super highly paid tech bros, their office space is pretty modest and in a cheap location. Granted, I haven't payed attention to their corporate changes recently, but at least a few years back that's how it was.
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They now own 2 game studios lol
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