An activist investor wants to add new members to Hasbro’s (NASDAQ:HAS) board and is urging the toy company to make changes to its current business strategy, including spinning off its lucrative Wizards of the Coast unit, according to a report by the Wall Street Journal.
Alta Fox Capital Management, which owns a 2.5% stake worth around $325 million, penned a letter to Hasbro shareholders nominating five directors and urging the company to replace its “brand blueprint” strategy with a plan that focuses on growing profitability in its consumer products and entertainment divisions.
The letter suggests that spinning off Wizards of the Coast and digital gaming, which include franchise brands like Dungeons and Dragons and Magic: The Gathering, will increase Hasbro’s share value by $100.
Hasbro’s stock closed at around $97 per share on Wednesday, down about 23% from an all-time high of $126.87 per share achieved, prior to the pandemic and prior to the acquisition of Entertainment One (eOne). The shares opened Thursday up a hearty $6.44, or 6.6%, to $103.48.
Alta Fox argues that Hasbro can double its valuation by spinning off Wizards, which it says has a different growth, margin and valuation profile compared to the company’s other segments. It also seeks to replace Hasbro’s current strategy for developing brands, a blueprint put in place by the company’s late CEO Brian Goldner, who unexpectedly passed away last October.
This strategy uses storytelling to drive toys sales. Under Goldner, Hasbro successfully grew beyond just toys and games and into the television, movies and digital gaming space.