Coverage: Hasbro makes offer for rival Mattel

Hasbro Inc. has made an approach to acquire rival Mattel Inc., the latest attempt to combine the two biggest U.S. toymakers in more than two decades.

Greg Roumeliotis of Reuters had the news:

A deal would create a toy powerhouse, uniting Hasbro’s My Little Pony, Monopoly and Nerf brands with Mattel’s Barbie dolls and Hot Wheels toys. A combined company would have more pricing power to negotiate with entertainment studios over TV and movie franchises.

Mattel’s stance toward Hasbro in this overture is not clear, and it remains far from certain that a deal will materialize, the source said, asking not to be identified because the matter is confidential.

Hasbro and Mattel declined to comment. The Wall Street Journal first reported Hasbro’s latest approach to Mattel.

Shares of Mattel jumped about 24 percent in after-hours trading. Hasbro shares rose about 3.3 percent.

Chris Woodyard of USA Today reported that toymakers are suffering due to the bankruptcy of Toys R Us:

A combination of the two toymakers could help them defend their stalwart toy brands against an onslaught of newer, tech-oriented toys and better deal with fallout from turmoil in toy retailing. Toymakers have been watching warily as the giant Toys R Us chain has been going through a Chapter 11 bankruptcy reorganization.

Plus, the acquisition could help boost the sagging stock prices of both companies.

Mattel shares rocketed 24% to $18.14 a share in trading after the close of the market Friday when the news broke. For the day, Mattel was already up 5% to close at $14.62, but below its Mattel’s 52-week high of $32.48.

Hasbro shares also got a little bit of a bounce. The stock was up 2.9% in after-hours trading to $94.10 a share.

It, too, is well off its 52-week high. Shares peaked at $116.20 in the summer.

Michael Corkery and Michael J. de la Merced of The New York Times reported that the two companies still have strong brands and movie opportunities:

The bankruptcy filing by Toys “R” Us in September also pummeled toy suppliers like Mattel. Toys “R” Us owes Mattel at least $135 million, according to court documents, more than twice as much as it owes Hasbro.

Last month, Mattel said the bankruptcy weighed on its third-quarter results. The company’s sales fell 13 percent from a year ago. Mattel’s chief executive, Margo Georgiadis, called the results “clearly disappointing” and suspended the company’s quarterly dividend.

Despite the recent financial pressure, Mattel still produces valuable toy brands like Hot Wheels and Fisher-Price, which industry analysts say make it ripe for a takeover by Hasbro.

This month, Hasbro announced that it had sealed an exclusive deal with Paramount Pictures to collaborate on producing films based on Hasbro brands. The two companies have already collaborated on movies based on the toys G.I. Joe and Transformers.