L Catterton, the private equity firm supported by luxury goods titan LVMH, has reportedly made an acquisition bid to Mattel, the renowned toy manufacturer of Barbie and Hot Wheels, according to sources privy to the situation who spoke on Monday.
This development might encourage other interested parties, such as competitor Hasbro, to contemplate making offers for Mattel. Hasbro, which is already aware of L Catterton's intentions, is deliberating on whether to also present a bid. Historically, merger discussions between Hasbro and Mattel have been unsuccessful. The sources, however, emphasized that it is uncertain whether L Catterton's interest will lead Mattel to consider a sale and requested anonymity due to the confidential nature of the matter.
A spokesperson for Mattel stated that the company does not address rumors or speculation. Hasbro also opted not to comment, and L Catterton has not yet responded to a request for comment. Following the news from Reuters, Mattel's shares surged by 20% to $19.49, elevating the toy company's market value to $6.5 billion. Meanwhile, Hasbro's shares increased by 4% to $61.25.
Mattel has been leveraging media collaborations to counteract the lukewarm demand for its products. Despite the financial and critical success of the Barbie movie released last year, Mattel's shares have declined by 23% over the past 12 months, as investors have expressed concerns over the company's profitability and management of unprofitable toy lines. The El Segundo, California-based company managed to reduce its first-quarter loss below expectations in April, aided by stringent cost controls amidst weak sales.
Activist investor Barington Capital urged Mattel in February to consider strategic changes, including potential options for its Fisher-Price and American Girl brands and the separation of the CEO and chairman roles. L Catterton, with $34 billion in managed assets, has completed over 250 investments in consumer brands since its inception in 1989, as per its website. In 2016, the firm collaborated with LVMH and the family office of LVMH CEO Bernard Arnault, selling a portion of its stake to them.
Hasbro, the creator of Play-Doh, has also implemented measures to cut costs. The company reported a less severe than anticipated decline in first-quarter sales in April and exceeded profit expectations, thanks to reduced inventories and consistent digital gaming revenue. Its shares have outperformed Mattel's, declining by 9% over the last 12 months.
