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Nelvana to Acquire Klutz for $74 Million
Jim Milliot -- 4/17/00
Purchase by Canadian group part of bid to become worldwide children's entertainment company

Nelvana Ltd., the Toronto-based children's entertainment company, has reached an agreement in principle to acquire children's publisher Klutz for $74 million. The acquisition is expected to close in early May, after which Klutz, based in Palo Alto, Calif., will become a stand-alone subsidiary of Nelvana.

Although Nelvana is one of Canada's largest producers of cartoons for preschoolers, Michael Hirsh, co-CEO of Nelvana, told PW that adapting Klutz products to television was not the main motivation behind the deal. "We want to grow their business and help them get into the preschool market," Hirsh said. Nevertheless, some Klutz properties will find their way to television, a point underscored by Klutz president John Cassidy: "We want to build the Klutz brand name, and we'll do that through TV and the Internet."

After the deal is closed, Cassidy will continue to oversee Klutz, and no operational changes are planned. The company, which has approximately 50 employees, will continue to produce 12-15 new interactive books and toys per year and keep its catalogue at about 125 products. Klutz was founded in 1997 by Cassidy and two partners and had sales of $41.4 million in 1999. Its bestselling titles include Juggling for the Complete Klutz, Cat's Cradle and The Face Painting Book.

Hirsh said the Klutz purchase is part of Nelvana's plan to become a worldwide children's entertainment company. The company, which bought Canada's Kids Can Press in 1998 (News, Aug. 31, 1998), has offices in London, Paris, Tokyo, Los Angeles and Shannon, Ireland. "We should be able to grow Klutz's international sales," Hirsh noted. Plans are still being developed as to how Klutz and Kids Can will work together, but Hirsh observed that Klutz "will have some role" in expanding Kids Can's American presence. With its assortment of products, Klutz has done extremely well in reaching nonbookstore outlets.

Nelvana, which several years ago considered merging with Golden Books, had sales of C$91.7 million and net earnings of C$10 million in 1999. Its film library has approximately 1,400 half-hour episodes, which include such properties as Franklin, Little Bear, Babar, Rupert and Pippi Longstocking.
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