UK licensing and merchandising company Hit Entertainment has acquired US rival Lyrick in a $275m reverse takeover that unites the companies behind popular children's characters Bob The Builder and Barney The Dinosaur.

Hit is to help fund the deal by placing new shares to raise $106m, most of the cash payment for Lyrick. The London-listed company has a portfolio of pre-school characters including Kipper The Dog and dancing mouse Angelina Ballerina.

The acquisition allows Hit to reduce its dependence on Bob, which generates around 60% of its annual sales, but gives it the chance to raise the character's US profile. Hit has a licensing deal with Mattel and has sold a package of Bob programmes to Viacom-owned children's channel, Nickelodeon.