Pawtucket-based toy company Hasbro is in talks to purchase rival toy company Mattel, The Wall Street Journal reported on Nov. 10.
The WSJ adds that the talks surrounding the deal were private, so they could not speculate on its terms or how far discussions had gone — or if they would result in an acquisition at all, an additional New York Times report states.
Hasbro is know for lines like Transformers, My Little Pony, and movie tie-in products, for franchises like "Star Wars," Marvel, and the Disney Princesses. Some of Mattel's most popular offerings include Barbie, Hot Wheels, Mr. Potato Head and American Girl.
While neither company has made a statement on the rumors, analysts have tried to fill the silence with reasonings of their own.
It's no secret that El Segundo, Calif.-based Mattel has been struggling. Its Q3 earning reports indicated its sales were down 13 percent worldwide and 22 percent in North America alone, coming in at $1.56 billion total reported revenue — down $25 million from its expected $1.81 billion Q3 profits.
Its stock did no better. It finished off the quarter valued at 9 cents per share, below the predicted 57 cents. Toys R Us' filing for for chapter 11 bankruptcy protection in late October didn't help Mattel's case either: the toy company's stock plummeted after Toys R Us's announcement, as the store's work accounts for more than 11 percent of Mattel's sales.
Hasbro, however, reported a $265.6 million Q3 earning, a year-over-year increase of 3.7 percent. While the company said it was adversely affected by Toys R Us's bankruptcy too, total revenue for the quarter was still $1.8 billion. An Engadget report argues that Hasbro's tech-focused toys have given the company an edge over competitors like Mattel, who have yet to embrace similar trends as fully as Hasbro.
An Engadget report argues that Hasbro’s tech-focused toys have given the company an edge over competitors like Mattel, who have yet to embrace similar trends as fully as Hasbro. The same Engadget report also says that the deal could be good for both parties, seeing as Hasbro "ditched" a few manufacturing facilities a while back, while Mattel still has several.
However, questions remain, like whether the potential acquisition would be a U.S. antitrust law violation, and if the move would even happen at all.
Or, how it would affect Rhode Island. It's worth noting that this is the second potential acquisition of a large enterprise by another large Rhode Island company, with rumors swirling that CVS was is in talks to buy Aetna for $66 billion just two weeks ago. In that case, where there were marginally more details about the nature of the deal, local analysts argued that it was "too early to tell" what it could mean for Rhode Islanders and Ocean State jobs.
Also of note is Hasbro's growing dominance in the tech-enabled toy sphere, one that many cite as one of the strengths that has given it a boost over rival companies. Does Hasbro's Rhode Island home base have anything to do with the company's success, and is it a testament to the ecosystem's attitude toward developing new technologies? It certainly hasn't hurt the state's virtual and augmented reality community, headed by RIVR in Providence.
In fact, in an earlier interview with RIVR team member, Adam Blumenthal, he cited Hasbro's VR work as one of the elements of the "perfect storm" of VR resources brewing in Rhode Island. “Basically, the idea [with RIVR] is to bring everyone together: Hasbro, to the Navy in Newport, and all the universities and many startups,” Blumenthal said. “Most people are not aware of what people are doing, [and RIVR helps] collect the practitioners for knowledge sharing, sort of wrap our heads around the market, the global industry and attract investment here.”
While these thoughts spur discussions on the internet, both Mattel and Hasbro's stock began to rise after the news broke Friday afternoon, with the former reporting a 21 percent growth to $3.09 a share, and the latter a 2.8 percent raise to $2.55.
