An unsolicited offer for merger by the toymaker MGA Entertainment Inc has been once against rejected by rival firm Mattel Inc.
A fresh offer aimed at merging the two companies was presented by MGA last month once again, said Isaac Larian, the founder and the chief executive of the privately held MGA, told the media on Tuesday. The first interest my MGA for merging with Mattel was made about a year ago and according to Larian, since then, the challenges and problems for Mattel have worsened.
“They’re not delivering. Look at the results,” Larian said in an interview.
The iconic Barbie doll is the most well known product that is made and marketed all over the world by the El Segundo based Mattel. Fisher-Price toys, Hot Wheels cars and American Girl dolls are the other well known and liked toys that are owned by the company.
L.O.L. Surprise, Little Tikes and Bratz dolls are among some of the more popular brands that have been created and are owned by the Chatsworth based MGA. Being a privately held company, the financial performance of MGA are not made public and are not publicly available bur according to Larian, his company generally generates sale revenues of more than $2 billion annually.
Similar to the earlier odder for merger, no specific price of the publicly held Mattel was proposed in the latest merger offer by MGA and Larian told the media that the most appropriate value for the publicly held Mattel could be helped to be worked out by an investment banker or other outside party. He however said that any value worked out for publicly held Mattel would “absolutely” be at a premium in comparison to the current market price, based on the current share value of Mattel.
As of Tuesday, there was a fall of 2.3 per cent in the shares of Mattel to $10.81 a share and based on that share value, the market value of the company comes to about $3.7 billion. Over the last 12 months, the share price of Mattel has fallen by a whopping 37 per cent. The price of one share of the company just five years ago was as high as $40.
A number of financial issues faced by Mattel were listed in a letter to Mattel Chairman and CEO Ynon Kreiz – which also contained the offer for merger, and included the current and ongoing operating losses of the company, a higher debt load and lower shareholders’ equity.
Last year, Mattel reported a loss of $531 million against sales of $4.5 billion. The company however has claimed that it is working on a turnaround and the new strategy is showing results. The primary strategy change has been the widening of the marketing strategy of Mattel’s well-known toy brands – with specific focus on marketing in the entertainment and digital fields. That is coupled with cost cutting plan of about $650 million.
Replying to the merger offer from MGA, Mattel wrote informed that its board “unanimously concluded that your proposal is not in the best interests of Mattel and its shareholders” and that no further interest in holding any discussions on the offer was expressed by the directors of the company
(Adapted from LATimes.com)