Cinar sold for $143.9 million US; new owner outlines growth strategy

The troubled children's animation company Cinar has been sold to a group led by the founder of the Nelvana film company for $143.9 million US. And the new boss was quick to outline ambitious plans to grow the company into a market-leading force in the chldren's entertainment business.

Michael Hirsh, who founded Nelvana more than 30 years ago and was its CEO until last year, was one of a dozen bidders for Cinar. His partners in the takeover bid include former Nelvana executive Toper Taylor and a unit of TD Bank.

"What's exciting about this opportunity is that we had to beat a lot of very strong U.S. players," Hirsh said Friday. "Almost all of the other competitors were U.S. players, so I kind of see this as Bay Street beating Wall Street," he said.

Hirsh said he would look at growing and acquiring brands to turn Cinar into a children's entertainment giant that would give Disney a run for its money.

The offer is for $3.57 US a share in cash, about a tenth of what Cinar shares were worth three years ago.

Cinar founders Ronald Weinberg and Micheline Charest, who hold 96 per cent of Cinar's multiple voting shares, have agreed to the buyout.

Cinar's board has also unanimously approved the deal.

"The Cinar board has worked hard to improve the overall operations of the company while, at the same time talking to potential purchasers who could provide shareholders with fair value for the company's assets," Cinar board chair Robert Despres said.

"I believe that we have found an excellent fit in the group led by Michael Hirsh," he said.

Cinar almost collapsed in 2000 amid a wave of lawsuits and a number of inquiries into its business and financial practices.

In August 2000, Cinar's board fired Weinberg and Charest.after an independent audit found irregularities in the company's finances. There were allegations that $122 million of the company's money had gone missing. One of the vice-presidents was fired.

The RCMP also looked into allegations that Cinar improperly collected federal film tax credits by putting the names of Canadian authors on scripts written by Americans. Cinar subsequently negotiated a settlement with the Quebec and federal governments to pay about $18 million in order to settle a dispute over the tax credit claims.

Cinar made its reputation on popular children's animation shows like Arthur, Caillou, The Busy World of Richard Scarry, Are You Afraid of the Dark? and Wimzie's House.

Late Thursday, Cinar released financial results that showed the company made $1.8 million in the third quarter on $29.8 million in revenue.