Mattel Says No to Hasbro Acquisition Offer

Mattel Inc. has snubbed Hasbro Inc.’s takeover approach said people who are familiar with this matter. This casts uncertainty about the possible combination of the two biggest toy companies in the world.

The rebuttal by Mattel shows that new CEO Margaret Georgiadis, who took the reins in February, is looking for the best bargain for Mattel in its negotiations with its biggest rival, even though stock at Mattel has underperformed significantly compared to Hasbro’s the past year.

Mattel told Hasbro the proposal it offered undervalued the toymaker and did not take into account sufficiently the potential that regulators may reject such a deal due to antitrust issues, said sources.

The terms proposed by Hasbro were not available and it was not clear if negotiations between the two toy companies would continue. The two have gone through this multiple times over the past 20 years.

Hasbro has not responded to questions left for comments, while Mattel declined to make any comment.

A hook up of the two toy companies would create a powerhouse in the industry with Nerf, Monopoly and My Little Pony brands joining forces with Barbie and Hot Wheels. It would allow more pricing power to be held by Hasbro to negotiate with entertainment studios over movie and television franchises.

The last time, the two companies held talks about merging was in late 2015, and date back to 1996.

Hasbro’s most recent approach of Mattel came with a position of strength. Prior to the report that Hasbro had approached Mattel last week; shares of Mattel were down 47% for the start of 2017, while shares of Hasbro were up more than 18%.

Mattel has a $6.3 billion market capitalization while Hasbro’s is $11.8 billion.

In September, Toys “R” Us , the largest toy retailer in the U.S. filed for bankruptcy protection, highlighting struggles in the industry, including children’s shift in preference from traditional toys to electronics and increased competition online.

Mattel has said that the bankruptcy was a reason for its weaker sales. During June, Georgiadis released her new strategy for Mattel that would expand its brands as well as accelerate growth across emerging markets.

Hasbro, which wants its revenue stream to become more diversified, also attempted to acquire Lions Gate Entertainment, the U.S. based entertainment and movie studio company based in the U.S., but the negotiations ended without reaching a deal.

 

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