Intellectual property rights outfit Chorion, the owner of kiddies cartoon character Noddy, has defended its decision to look for a buyer for its children's rights division and thereby reject an initial approach for the entire company from Entertainment Rights, the owner of Postman Pat. Leslie Copeland reports.

Chairman Nick Tamblyn claims Chorion's decision to look for a buyer for the children's arm – he has a target price of £30 million for this division – is based on the simple fact that he believes its sale will achieve 'a substantially greater value' for shareholders than Entertainment Rights was actually offering for the entire Chorion operation.

At present, Chorion consists of a children's division, dominated by Enid Blyton characters such as Noddy and the Famous Five, as well as an adults division comprising ownership of the bulk of the Agatha Christie rights catalogue and Georges Simenon rights. The group exploits these rights through books, films, television programmes and branded merchandise.

Since the company was de-merged from clubs and bars group Urbium this year, however, its shares slumped from 11p to a low of 3.25p following profits warnings, contract delays and bad debts.

The fall in the shares was what no-doubt prompted Entertainment Rights to write to Chorion's board in October expressing its interest in making a bid for the company at above its then market price.

But before it could complete a due diligence report and table a tentative offer (which Entertainment admitted would most likely have been in the form of cash and shares) Tamblyn and the rest of Chorion's directors expressed their belief that the children's division alone was worth substantially more than the price at which the market valued the entire company.

Tamblyn backed-up Chorion's decision to go public for a buyer by claming that a Noddy video had sold 23,762 units in its first week of sale, a morning TV programme (called Make Way for Noddy) was achieving commendable viewing figures on Channel 5, and the fact that the Adult entertainment arm was making considerable progress with three Poirot movies due to be delivered next year and others in the pipeline.

He also claims that the board has also received a number of alternative approaches.

At 4.25p – up 0.5p on the day – Chorion has the potential to deliver gains to those investors who believe the break-up value will easily exceed its current £22 million market capitalisation.