Hasbro and Mattel are the leading producers of toys in the US. There are speculations made by the company over takeover attempt to be made by Hasbro of Mattel since last month. This deal is considered to be fruitful and beneficial for both the toy manufacturing companies in the US based on their current market share and financials. This news hiked the share price of Mattel by 23 percent on Monday helping it to reach at $17.95 when a report by Wall Street Journal provided information about unclear terms of the deals presented by Hasbro over their attempt to take over Mattel on Friday when the market was closed. The takeover strategic decision gained more popularity and strategic approach after the speculations made by an analyst who suggested that the acquisition of the company would be beneficial for their long-term sustainability in the competitive market.
But there was an adverse effect on the overall sales of Mattel last month which drop slightly. The decline of the sales revenue affected the dividend of the shareholders which was suspended by the board of directors and a cost-cutting in the overall cost in order to cope up with the decline. The strategy for the acquisition was also supported by Gerrick Johnson, an analyst at BMO Capital Markets considering the financial position and market share of Hasbro. Mattel has a wide range of brand toys which captured the major place in the toy market making it one of the most popular and high brand Value Company in the market. The most popular brands currently prevailing in the market are Barbie, Thomas Hot Wheels to name a few which are currently worth of $8 billion. There is another range of products consisting of toys like HE-Man which would be slightly less popular than their premium products but still could contribute nearly $2 billion of market value.
The news of acquisitions didn’t only benefit the Mattel to hike their share price but was beneficial for Hasbro as well whose share price hiked by 8.1 percent and reached to $98.88 when the market was opened on Monday. This hike of Hasbro is considered to be the highest among the fluctuations in the share price since last seven months. Both the companies have not disclosed or confirmed about the speculations running in the market. Similar merger and acquisitions discussion among the two major companies in the toy industry was running in the market since last year but no concrete resolution or result has yet been seen. There is a decline in the sales of the toys in the North American market and Mattel states that the Toys “R” Us is closely responsible since they have declared bankruptcy recently.