If you thought Jim and Pam on “The Office” took forever to get together, you’ve clearly never followed the decades-long mating dance between the world’s two largest toy companies, Hasbro and Mattel — one, the owner of My Little Pony, Nerf, Mr. Potato Head and nearly all things Disney; the other, parent of Fisher-Price, Barbie, Hot Wheels and (once upon a time) nearly all things Disney, before losing the license to Hasbro in 2016.
The rivals once again spun into each other’s orbits this week, with Hasbro mulling a takeover offer for its floundering competitor. Both companies saw stock prices surge on Monday following mention of the possible merger on Friday — Mattel’s by 20 percent and Hasbro’s by a more modest 6 percent. Mattel’s stock prices continued to climb into Tuesday, CNN Money reported.
However, as of Wednesday night, Mattel has once again snubbed Hasbro’s advances. Mattel’s stock prices dropped as much as 7.3 percent following the report, hitting a low of $16.99 in late trading.
Reuters reported that Mattel felt Hasbro’s proposal undervalued the company and also failed to account for the potential that regulators may reject the deal due to antitrust concerns. That was according to unidentified sources familiar to the matter, who could not be named due to the confidential nature of the discussion.
A deal would seem to be in Mattel’s favor. Shares are down 33 percent this year, despite Mattel’s efforts to pump fresh life into the company by bringing on former Google exec Margo Georgiadis as CEO and introducing more tech-focused toys.
The toymaker has been on a downward spiral since losing that Disney license (and the princess toys, particularly the “Frozen” ones, that went with it). However, as U.S. News noted, sales were on the decline long before that — since as early as 2013 — and just last month, MAT stock suspended its dividend to free up cash. Furthermore, CNN stated that the bankruptcy of Toys R Us could put both toy companies in a tough position this holiday season, while a merger could give the resulting toy giant more clout.
From Hasbro’s side, it’s a chance to bring Mattel’s brands under its own umbrella for a relatively small investment — or so the company may have thought, before Mattel announced it wouldn’t take the deal.
To be fair, Hasbro’s shares aren’t so shiny right now, either, with the Toys R Us bankruptcy knocking shares down 17 percent. But it does seem like the two retailers could help each other out. They need each other now more than ever — that is, if antitrust regulators would even allow the deal.
Mattel investor Jerome Dodson told Bloomberg that he didn’t expect Mattel to settle for less than $22 to $25 per share (a figure Bloomberg noted is more than 20 percent above the company’s closing price on Wednesday).
Dodson runs the $4.9 billion Parnassus Endeavor Fund, a part of San Francisco’s Parnassus Investments, which owns around 16 million Mattel shares, making it the toy company’s sixth-largest investor. In an interview with Bloomberg, Dodson admitted to Mattel’s challenges but said, “it is still a great franchise.”
Reports are saying that Georgiadis wants to drive a hard bargain. Ultimately, however, neither retailer has offered up any official comments on the Mattel rebuff or whether the two will continue in merger talks beyond this point.
Either way, U.S. News had some good news for holiday shopping: Whether the merger happens or not, it couldn’t possibly close earlier than the end of the year. The landscape for holiday shopping has already been laid. What you see today is what you’ll get.