Image copyright PA

Entertainment One, the owner of children's TV brand Peppa Pig, has rejected a takeover bid from ITV.

ITV offered 236p a share for the company, valuing it at more than £1bn.

But the Canada-based film distribution and TV production company said the bid "fundamentally undervalues the company and its prospects".

Entertainment One owns more than 40,000 film and television titles, including last year's Oscar-winning Spotlight and AMC drama Fear the Walking Dead.

In all, it has 4,500 hours of TV programming and 45,000 music tracks. Its library is valued at more than $1bn.

Shares in Entertainment One jumped almost 10% on Tuesday and closed a further 10% higher on Wednesday at 240p.

In a statement, ITV said it had "a clear strategy that, over recent years, has created significant value for shareholders".

"A key part of that strategy is continuing to build a scaled international content and global distribution business, with a focus on US-scripted content.

"ITV believes that the proposed combination with eOne has strong strategic rationale and would further accelerate ITV's rebalancing of the business."

Fatter bid?

Neil Wilson, markets analyst at ETX Capital, said: "ITV will be disappointed that its bid for Entertainment One has been rejected, but it can hardly be surprised.

"ITV may well fatten up its bid - Entertainment One was valued at close to 368p in July 2015, before its main backer Marwyn Value Investors sold off a big chunk of its holding.

"Around this time Entertainment One began a series of acquisitions that has hit its price, while a refinancing plan in December sent the stock plunging 20%."

Image copyright PA Image caption Coronation Street is one of ITV Studios' most successful shows

ITV chief executive Adam Crozier has said the company is striving to build "a global production business of scale" in an attempt to reduce its reliance on advertising revenue.

Shares in ITV have fallen almost 30% this year and it was particularly hard hit following the Brexit vote in June.

The broadcaster has made a series of acquisitions to bolster the ITV Studios division, which last month reported a 31% rise in revenues to £651m.

ITV Studios makes programmes including Coronation Street, Come Dine With Me, Hell's Kitchen, I'm A Celebrity Get Me Out of Here and the Jeremy Kyle Show.

'Huge pressure'

Last year, ITV bought Talpa, the production company that makes The Voice. The UK version of the talent show will move from BBC1 to the commercial broadcaster in 2017.

Mr Wilson added: "Terrestrial TV is coming under huge pressure from on-demand services like Amazon Prime and Netflix, which also own a lot of their own content.

"ITV has been snapping up production companies as it clearly understands content is vital for its future, but it too could be the subject of a takeover.

"A sharp fall in its share price this year and the collapse in sterling since the Brexit vote has left it wide open. The cheap pound makes unique UK assets like ITV very desirable."