Hasbro has recently moved to acquire Mattel, raising the possibility that the two toy industry titans may merge. Hasbro's stock has been on the upswing over the past year, with its market value increasing 8 percent since 2016. Mattel, on the other hand, has had a rougher time of it: Its stock has dropped 52 percent over the past year.
Hasbro's takeover bid has turned the tables of the relationship between the two companies — over two decades ago, Mattel unsuccessfully attempted to buy out Hasbro. Now, with Mattel in poor health, Hasbro has pounced.
The New York Times reports that, according to sources knowledgeable of the merger discussions, Hasbro approached Mattel in recent months because of Mattel's financial hardships. But toy companies more broadly have struggled as internet shopping has superseded the retail market — and the fact that kids are hard-pressed to choose a traditional toy over a phone or tablet hasn't helped, either. The industry's difficulties came to a head in September, when Toys "R" Us declared bankruptcy. The bankruptcy dealt a significant blow to Mattel, which is owed at least $135 million by Toys "R" Us. Mattel's third-quarter sales fell 13 percent year-over-year, in part because of the Toys "R" Us fiasco.
Mattel, though, still retains rights to valuable toy lines, like Hot Wheels and DC Comics. But Hasbro is responsible for many of Disney's toys, including Marvel and Frozen, and also produces classic board games, like Candy Land and Scrabble. What's more, this month, Hasbro and Paramount Pictures announced a film production and distribution deal. The two companies had already collaborated on Transformers and G.I. Joe movies, but the deal will ensure that Hasbro's properties continue making it onto the big screen.
A potential Hasbro-Mattel merger evokes recent news of Disney's attempts to acquire Fox. Both instances point to the value inherent in consolidating diverse intellectual properties under the same roof. A united Hasbro-Mattel, though, would do something that Disney-Fox couldn't: Create a single company that represents both Marvel and DC in its industry. A stranglehold on the comic book toy space would be an exceptionally fruitful thing for any company to have.
Ultimately, both Disney and Hasbro's actions are reminiscent of one of Hasbro's most famous products: Monopoly. Big companies seem to keep getting bigger and swallowing the smaller fish in the pond. As Hasbro carries on churning out Transformers movies, and as Mattel carries on dropping in market value, expect to hear more about this literally game-changing merger.
Source: New York Times