Global entertainment group Entertainment One will acquire Sydney-based distributor Hopscotch Group for £12.9 million ($20.07 million).

The deal will prove a windfall for the company's owners: Troy Lum, Frank Cox and Sandie Don, who will be issued more than 4.1 million shares in eOne and approximately £6.45 million in cash as part of the deal. They will remain with the company, which will form part of eOne’s Filmed Entertainment division headed by Patrice Theroux, after the deal is completed early next month.

Hopscotch posted unaudited revenue of approximately £11.9 million ($18.51 million) and earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately £1.9 million ($2.95 million) in the year ended June 2010.

The acquisition includes Hopscotch's distribution and home entertainment divisions, but not the recently launched production company Hopscotch Features, which received $1 million in Screen Australia funding via the enterprise program in September 2009.

Last year, Hopscotch released 15 titles theatrically and it controls a library of more than 300 feature film and television titles.

eOne, which also has international film distribution operations in Canada, the UK, Benelux and the US, said it expects the deal to boost its earnings per share in the first year after the acquisition.

It plans to pursue new film distribution opportunities within Australia and on a multi-territory basis, as well as sell its television titles produced by its own television business directly into the Australian market.

The last major distribution deal in the local market occured in May 2006 when publicly-listed entertainment company Funtastic bought Madman Entertainment for $34.5 million.

However, the final price was considerably higher as the company met performance targets which increased the deferred bonuses paid to Madman founders Tim Anderson and Paul Wiegard over the next four years. They received a final deferred cash payment of $10.4 million in May 2010.

eOne chief executive Darren Throop said the Hopscotch acquisition marks a significant step forward for eOne.

“It adds to our existing international operations and is a major development in the delivery of our strategy,” he said in a statement. “Troy, Frank and Sandie have built a successful and dynamic business. I am pleased to welcome them and their team into the group and am excited about building eOne's position further in the Australian market and capitalising on the additional opportunities that our Australian presence will bring to the group as a whole."

Hopscotch managing director Troy Lum said the deal will enable Hopscotch to continue its growth as part of a larger international group.

“eOne has successfully built a genuinely unique multi-territory film distribution operation and we are delighted to be a part of the eOne group going forward," he said in a statement.

Troy Lum.

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