Thomas the Tank Engine is to team up with Bob the Builder after media company Gullane Entertainment recommended a £130 million sterling takeover by rival HIT Entertainment.
HIT, which already owned children's characters Barney the Dinosaur and Pingu the Penguin as well as Bob, said the enlarged group would be "one of the leading independent young children's studios in the world".
Gullane Chairman Adam Mills said that after a review of its alternatives "the board has concluded that an acquisition of Gullane by HIT is in the best interests of shareholders".
The equity portion of HIT's offer would give Gullane shareholders the opportunity to share in development of the combined group, Mills said.
On June 25th, HIT revised its offer to 1.5412 new HIT shares and 860 pence cash for every three Gullane shares.
At the time, Gullane, whose other characters include Sooty and Captain Pugwash, said it had also been in talks with other potential bidders. Carlton Communications, a major shareholder in Britain's top terrestrial commercial network ITV, was said to have had talks about a possible bid.
But the writing was on the wall - HIT said its cash and shares offer, then worth 430 pence, had the backing of investors owning over 50 per cent of Gullane shareholders including Britt Allcroft, founder of Britt Allcroft Company, the previous name for Gullane.
"Thomas the Tank Engine is a premier, world-class brand and fits perfectly with our own strong children's brands," HIT Chief Executive Rob Lawes said when detailing his revised offer.
HIT had previously approached Gullane in May with an offer of around 500 pence per share but withdrew it after Gullane said its full-year profits would be flat because US sales of its Guinness World Records book had fallen short of expectations.
Based on Thursday's closing prices, HIT's offer was worth 425 pence per Gullane share, the exact price at which Gullane ended. HIT shares closed at 269 pence, valuing the company at 372 million pounds.