Hasbro makes takeover offer for Mattel

Hasbro makes takeover offer for Mattel

Hasbro makes takeover offer for Mattel

Hasbro is one of the largest toy companies in the world (after Lego), and according to a report in The Wall Street Journal, it recently made an offer to take over its chief rival, Mattel.

Shares of Mattel, which makes Barbie dolls and Hot Wheels, dropped 47 percent this year, while stocks for Hasbro rose nearly 18 percent.

The terms of any possible deal "couldn't be learned", the WSJ said, and it is not clear if the approach will move forward.

A new combined entity would have pricing power that it could use to negotiate with entertainment studios and over movie and television franchises. Despite the financial concerns, Mattel's ownership of valuable brands makes the toymaker ripe for takeover by Hasbro.

Shares of Mattel jumped about 24 percent in after-hours trading. Hasbro shares were up 3.3%. Last month, Mattel said the toy retailer's bankruptcy - a result of shifting consumer preference for electronic toys and e-commerce - was a factor in the company's third quarter results and Mattel's sales have fallen 13 percent since past year.

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Hasbro has an $11 billion market value following its increase of 18% in stock price since the start of 2017. Mattel's stock fell to its lowest level since 2009 that day.

"Both companies would benefit from a merger, but Mattel stockholders might oppose a deal that values the company on its depressed stock price, " said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

The other more ensuring detail is Mattel's stock price is way down nearly 50% compared to this time a year ago.

If completed that deal would have given Hasbro a much needed direct line to Hollywood with more television shows and movies tied to toy brands.

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