Will Hasbro And Mattel Make It Official?
In early February, 2016, two of the biggest toy makers in the business got together to talk mergers. Hasbro and Mattel reportedly held talks to see about becoming one toy and play mega company, but as of now detail remain sketchy and are few and far between. So what are the odds of the two toy makers joining forces? Analysts say unlikely, but stranger things have happened.
The Two Companies To Date
Hasbro and Mattel together represent a huge chunk of the multi-billion dollar toy industry. Mattel is a some $6 billion plus multi-national company with brands to its name like Barbie, Hot Wheels, American Girl, Fisher-Price, and many more permeating across the globe. Hasbro is a bit smaller, but not by much, bringing in some $4.28 billion in 2014 and responsible for household names including Nerf, Play-Doh, Scrabble, Trivial Pursuit, and anything under the Milton Bradley, Parker Brothers, Playskool, or Tonka monikers.
According to sources reported by Bloomberg, Hasbro approached Mattel about a possible merger in late 2015. By the new year, the two were entering into talks, but nothing has yet been made public regarding their results. These talks aren’t a first between the two giants. In 1996, Mattel made a $5.2 billion offer for Hasbro but later withdrew citing an intolerable climate.
Hasbro, now pulling in less than the 1996 bid for their name, is working instead on a merger that would allow them greater access to more brands and licenses without the toy maker having to completely give up and sell out.
The Merger Potential
So what are the odds that the two companies get together? Analysts say unlikely. While the combined company would control about 40 percent of the US toy market with annual sales at an excess of $10 billion, there is still the issue of regulators.
If the companies were to merge, the next largest competitor would be Toronto’s Spin Master, the maker behind Air Hogs, Aquadoodle, Kinetic Sand, and recent acquisition Etch a Sketch. While there is recognition in these names, at the end of the day Spin Master makes up around 5 percent of the total market. In talks with a BMO Capital Markets Corp. analyst, the Boston Herald reported the expert as stating that even if the companies agreed, antitrust issues would stop the eventual merger due to lack of competition.
This is, of course, assuming that the two companies will come to an agreement at all. They have markedly different corporate cultures, and have been sparring for years over that. Hasbro’s 1996 rejection is one indicator, as is the companies’ well-publicized battle over a $500 million Disney Princess fashion doll license, a battle underdog Hasbro eventually won.
So will the two companies merge? Professional opinion says it’s unlikely, and popular speculation seems to agree. Stranger things have happened in business though. What is almost certain is that these talks, if they aren’t dismissed shortly, will be long and tumultuous. If the two are to become one, it’s going to take some time and a lot of finessing.
- Deals Profit
- February 18, 2016
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