Chalk it up to a worsening credit market, as Michael Donovan on Monday unveiled a deal to sell Halifax-based DHX Media to Entertainment One for around $68 million.

‘We’re in an environment where the stock market world is melting down. As a little company, we had to get big to survive,’ Donovan told Playback Daily on Monday morning.

The deal, subject to approval by DHX and Entertainment One shareholders, is structured as a reverse takeover of DHX by Entertainment One. As a result, E1 stands to secure a listing on the Toronto Stock Exchange so it can tap North American equity.

‘This deal is a very important step toward building our content ownership and distribution infrastructure around the world,’ E1 CEO Darren Throop said in a statement.

‘Adding Decode’s proven television production capability and DHX’s impressive content library to our existing assets positions Entertainment One as one of the world’s top children’s television companies,’ he added. Decode Entertainment is among DHX’s holdings.

As part of the transaction, E1 will acquire all outstanding DHX stock at $1.59 per share. Specifically, its shareholders will receive one common share of DHX for each Entertainment One share held. DHX shareholders will be offered either 0.9409 common shares of DHX for each existing DHX share held, or $0.3975 in cash and 0.7057 newly issued common shares of DHX for each existing DHX share held.

If the acquisition is completed, Donovan said he will leave DHX, a company he founded in 2003, two years after he and his brother Paul sold Salter Street Films to Alliance Atlantis Communications.

Donovan added he and Entertainment One may negotiate a first-look deal as he continues in film and TV production on his own. He said that the rest of the DHX senior management are expected to negotiate new contracts with Entertainment One as they are absorbed into the new TV division formed in July with the acquisition of Blueprint Entertainment and Barna-Alper Productions.

Also in July, Entertainment One acquired domestic distributors Oasis International and Maximum Films.

Donovan said Entertainment One in recent weeks approached him to talk seriously about a reverse takeover, but only after he first contacted Marwyn Investment Management, E1’s British backers, last winter about separate financing for one of his projects.

‘They [Marwyn] urged me to consider a conversation [with Entertainment One]. It didn’t progress, until the last couple weeks. That’s when the clutch went in and the deal started to form,’ he said.

Besides the TSX listing, acquiring DHX also hands Entertainment One a choice kids TV production and distribution assets that include Decode Entertainment, Halifax Film and Studio B Productions.

The DHX library of TV series includes The Guard, This Hour Has 22 Minutes, Franny’s Feet, Poko and Martha Speaks.

The transaction will also get Entertainment One’s own catalogue to around 4,000 half-hours of TV programming, and a feature film library of over 3,700 titles.

By swallowing DHX, Entertaiment One forecasts pro-forma revenue of around $665 million and an adjusted EBITDA of about $56 million.