Thomas the Tank Engine chuffs off to LA

Here’s a deal the Fat Controller would be perfectly justified in grumbling about. Thomas the Tank Engine (and yard-mates like Bob the Builder, Fireman Sam, Angelina Ballerina and Pingu) are puffing off the Island of Sodor and all the way to LA, after their parent company, Hit Entertainment, was acquired by Mattel for a cool $680m (£425m). But Apax, its private equity owners, won’t be getting aboard the party express quite yet: they had hoped its price tag would be nearer the $1bn mark…

You can see why Apax isn’t too happy: it originally acquired Hit for £489.4m in 2005 – which, on top of the $180m-odd it made in revenues annually, would work out at about $890m in today’s money. But when you factor in disposals like its Guinness Book of Records brand, as well as the rather weak pound, Apax has made a loss of about $70m. Which is the sort of figure that would cause the Fat Controller to bust his boiler.

For Mattel, on the other hand, it’s a rather nifty little deal: after all, it already sells Thomas & Friends products under a license from Hit, with global sales of die-cast and plastic toys worth $150m. And, with a third-quarter net profit of $300.8m, it can well afford to finance the deal with a combination of cash and debt. The only worry, of course, is the prospect of some sort of ill-advised alliance with its biggest money-spinner, Barbie. Barbie the builder, perhaps? To be fair, it might do her good to put her to work in an industry that doesn’t involve hairdressing or babies…

The only solace Apax can take is in the fact that it’s not the only company having problems selling off entertainment brands. Earlier this year, Permira put a stop to its attempt to sell off the UK’s largest independent production company, All3Media, after offers proved decidedly disappointing. And let’s be fair: considering the state of the market at the moment, the likelihood is that as time goes on, the frequency of situations like that will only increase…