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Mattel to buy Canada’s Mega Brands for about $460 million
February 28, 2014.
(Reuters) - Mattel Inc (MAT.O), the world’s No. 1 toymaker, said it agreed to
buy Canada’s Mega Brands Inc (MB.TO) for about $460 million, including debt, to
expand its construction and arts and crafts offerings.
Mattel, known for its Barbie and Hot Wheels brands, offered C$17.75 per Mega
Brands share, representing a premium of 36 percent to the stock’s close of
C$13.07 on Thursday.
“The construction play pattern is popular, universal and has had one of the
fastest growth rates over the past three years,” Mattel’s Chief Executive Bryan
Stockton said in a statement.
Montreal-based Mega Brands makes construction toys and arts and crafts under
brands such as MEGA Bloks, Rose Art and MEGA puzzles. The company said it has
estimated net sales of $405 million in 2013.
Construction toys and other traditional toys have become popular among parents
seeking to limit the amount of time their children spend using iPads and other
electronics with screens.
Both Mattel and its U.S.-based rival Hasbro Inc (HAS.O) posted
lower-than-expected results in the fourth quarter.
In contrast, Denmark’s LEGO, mostly known for its colorful bricks, increased
sales by 10 percent in a sluggish global toy market in 2013.
Mattel said on Friday that shareholders holding 39 percent of Mega Brands,
comprising its biggest, Fairfax Financial Holdings Ltd, and the company’s
founding family, have agreed to vote in favor of the deal.
Mega Brands will pay a termination fee of $12 million to Mattel if it accepts an
unsolicited proposal, subject to Mattel’s right to match the proposal, the
companies said in a joint statement.
Mattel said it plans to fund the acquisition through a combination of new debt
and cash.
RBC Capital Markets is acting as financial adviser to Mattel, while Latham &
Watkins LLP is acting as legal adviser and McCarthy Tetrault LLP as Canadian
legal adviser.
Rothschild is acting as financial adviser and Osler, Hoskin & Harcourt LLP is
acting as legal adviser to MEGA Brands.
Mattel shares have fallen about 9 percent in the past 12 months to their
Thursday close of $37.15 on the Nasdaq.
Reuters.com
-end of report-
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