Hasbro, Inc. (HAS) Reportedly Mulls Mattel Acquisition

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Hasbro, Inc. (HAS) Reportedly Mulls Mattel Acquisition

Hasbro Inc. has made a takeover offer for rival Mattel Inc., according to people familiar with the matter, a potential combination that would unite the two biggest USA toy makers and put Barbie and G.I. Joe under the same roof.

If a deal were reached, it would create a huge powerhouse in the toy industry, uniting Monopoly, Nerf and My Little Pony brands from Hasbro with Mattel's Hot Wheels and iconic Barbie.

The news first broke courtesy of the New York Times, with the outlet revealing that the approach from Hasbro was made in recent months. A combined company would have more pricing power to negotiate with entertainment studios over TV and movie franchises.

Mattel and Hasbro have held talks a number of times in the past, including as long ago as 1996 and as recently as late in 2015.

Hasbro's strategy of using entertainment assets to fuel toy sales has paid off richly - the company's market cap is $11.4 billion, more than twice that of El Segundo, CA-based Mattel. Hasbro shares rose about 3.3 percent.

"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 September bankruptcy of Toys "R" Us, the biggest USA toy retailer, highlighted the struggles facing the sector, including online competition and children's shifting preference for electronics over traditional toys.

The other more ensuring detail is Mattel's stock price is way down nearly 50% compared to this time a year ago. The toymaker's stock has also taken a hit, falling 52 percent over the past year while Hasbro's shares have increased 8 percent.

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