In what is the latest of a long line of merger and acquisitions stories, it seems that the really big boys are now getting in on the act: according to a report by Bloomberg, late last year, Hasbro initiated talks with Mattel for what would become the worlds largest toy company. This is not the first time a merger has been proposed; twenty years ago, Mattel attempted to buy Hasbro for $5.2 billion, but Hasbro resisted the deal with what Mattel described as a “scorched earth” campaign. In the end, Mattel withdrew the offer citing an “intolerable climate” created by its competitor’s use of the media and politicians to fight the proposed takeover. Since then, there has been a lot of water under the bridge and representatives for Hasbro and Mattel have declined to comment, so we are left to speculate as to why the subject of a possible merger has arisen once more.
|– Image by boardGOATS with components from wikipedia.org|
Both Hasbro and Mattel are currently valued at approximately $10 billion with an annual revenue in the region of $5 billion. Hasbro owns brands as divers as Furby, My Little Pony, Playdoh and Nerf, but is perhaps best known amongst gamers for titles like Monopoly, Cluedo, Connect 4, Cranium, Battleship and Jenga. Mattel brands perhaps tend to be aimed slightly more at the toy market with Barbie, Hot Wheels, Matchbox and Fisher-Price some of their biggest sellers. There are also a number of games under the Mattel umbrella though, including UNO, Othello, Scene It?, Apples to Apples and Scrabble. Clearly, both companies have a very similar portfolio, and are essentially direct competitors. This has been very clearly demonstrated with Hasbro recently taking the licensing rights to Disney’s lucrative Frozen and Princess brands from Mattel, a change that will undoubtedly make a dent in their bottom line. While changes are often a sign of a robust market, such seismic shifts are seldom good for the companies involved at least in the short term, often leading to restructuring and job losses – we have seen something similar with Mayfair Games and the recent loss of the distribution rights to the Catan Brand.
|– Image used with permission of BGG contributor Susie_Cat|
It seems there are two other key driving forces however. Firstly, it would make them much stronger competition for the Danish company, Lego, which has been growing much faster than its U.S. rivals. Secondly, both Hasbro and Mattel are looking to expand their presence in the digital market, with movie and computer game tie-ins similar to those seen with Hasbro’s Transformers franchise, and, according to Bloomberg, a merger would facilitate this. The real question though is, regardless of whether or not Hasbro and Mattel can agree a deal, would the regulators let it happen? In the last year alone, the U.S. Department of Justice has prevented Electrolux’s purchase of GE’s appliance business as well as stopping mergers between Office Depot and Staples, and Sysco and U.S. Foods, all due to concerns about industry concentration and the potential for higher prices resulting from the deals. So it seems quite likely that a deal between Hasbro and Mattel would go the same way. If they do merge, however, the giant Hasbro-Mattel would make Asmodee look like very small minnows indeed, right up until they get gobbled up too.
|– Image from 3dprint.com|