Hasbro, Inc. (NASDAQ:HAS) has reportedly made an offer to acquire rival toymaker Mattel, Inc. (NASDAQ:MAT) according to sources familiar with the dealings.
The sources revealed that Hasbro has plans to acquire Mattel and that it has already presented an offer for the purchase. This highlights the fact that there has been speculation that the two companies would join forces in the future. The announcement thus brings the speculation a step closer towards becoming a reality. The Wall Street Journal confirmed on Friday that Hasbro has presented an acquisition offer to Mattel though the terms of the offer were not disclosed.
“A deal would create a toy powerhouse, uniting Hasbro’s My Little Pony, Monopoly and Nerf brands with Mattel’s Barbie dolls and Hot Wheels toys,” stated a Reuters report.
The report further pointed out that such a deal would also give more pricing power to the conglomerate thus placing it at a better negotiating position when making movie and TV franchise deals with entertainment studios. One of the sources pointed out that they were confident that the deal will indeed take place. However, there has been no official confirmation about the deal by any of the two firms.
Despite no official confirmations, investors have responded positively to the announcement of the upcoming acquisition. Hasbro’s shares surged by roughly 3.3% and Mattel shares went up by 24%. A successful deal would be a positive step forward for Mattel which has been suffering some weakness especially as a result of failures in some of its toy lines. It will also strengthen Hasbro’s portfolio and give it a bigger market share. Hasbro also got rid of some of its manufacturing facilities a while back and the acquisition would give it access to Mattel’s facilities.
Despite the positive upside of an acquisition of Mattel by Hasbro, there are still some worries the acquisition might lead to a violation of antitrust regulations through market domination. However, the two companies face a lot of competition from tablets and gaming consoles.
Hasbro stock closed the latest trading session on Friday at $91.45 after a 3.11 percent gain compared to the value of the stock during the previous close.