Entertainment Rights has bought Tell-Tale Productions Limited, creators and producers of award winning The Tweenies, for £3.1m ($5.56m).
The Tweenies are very popular worldwide
The BBC show featuring the brightly coloured characters has been a hit in 70 countries, generating sales worth millions of pounds.
The programme features characters Milo, Jake, Bella and Fizz.
"This is a significant acquisition," said Mike Heap, chief executive of Entertainment Rights.
"With the combination of Tell-Tale's strong creative talent and ER's strength and expertise in television and video distribution, licensing, merchandising and brand management, the combined company will be a formidable force in the worldwide kids market.
"The Tweenies have sold more than three million videos in Britain alone and have even scored a Top 10
Earlier this year television company Nickelodeon bought the rights to broadcast the show in the US.
And there are plans to produce a full-length Tweenies feature film between 2005 and 2006.
Entertainment Rights is a UK media company specialising in the ownership, development, distribution and merchandising of children's and family programming, characters and brands.
Its portfolio of characters includes Postman Pat and Basil Brush.
Tell-Tale's latest audited accounts for the year to 31 March 2003 report profit after tax of £900,000 and net assets of £1.4m.