Mattel (MAT) to buy Mega Brands for $460 million

Mattel says its acquisition of Mega Brands will help the maker of Barbie dolls and Hot Wheels cars build up its offerings in toy blocks – a segment of the toy industry reportedly worth $4 billion.

By , Staff writer

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    Mega Blocks and Lego toys are pictured in a store in Toronto. Mattel, the world's No. 1 toymaker, said it agreed to buy Canada's Mega Brands for about $460 million to expand its construction and arts-and-crafts offerings.
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Mattel, maker of the Barbie doll and Hot Wheels line of toy cars, announced Friday a $460 million deal for the Montreal-based Mega Brands and a bigger piece of the growing $4 billion construction-set segment of the toy industry.

As of Friday morning, Mattel's stock was trading at about $37.37 per share, up by 22 cents.

The Mega Brands acquisition gives Mattel access to Mega Brands' products based on licensed properties such as SpongeBob SquarePants, and the Mega Blocks construction building sets.

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Mattel said the acquisition expands its offerings of what it called construction building sets – basically prepackaged toy blocks – which the company said is among the fastest-growing toy categories. 

The Montreal-based Mega Brands had net sales of $405 million in fiscal 2013 and employs 1,700 people in 17 countries, according to a Mattel statement.

Mattel generated more than $6.4 billion in sales in 2013, and reported a profit of nearly $904 million, the company reported in Securities and Exchange Commission flings.

Marc Bertrand, Mega Brands' president and chief executive, said the purchase will open up more opportunities for the company's products.

"We are confident Mattel's scale and global platform spanning 150 markets - combined with the expertise of our people in the construction and arts & crafts categories - will create tremendous growth opportunities for our brands," Mr. Bertrand said in a statement.

The El Segundo, California-based Mattel employs approximately 29,000 people and the toymaker's product lines include, the Barbie doll, Hot Wheels, Fisher Price, as well as licensed properties tied to Disney and WWE Wrestling, among others.

Toy building sets generated about $1.99 billion domestically in revenue during 2012, according to the Toy Industry Association, a trade group made up of about 600 manufacturers. That amounts to about a 22 percent increase in sales over the previous year.

Arts-and-crafts toys revenue also grew by 4 percent from 2011 to 2012, reaching about $1.01 billion, according to the organization.

All together, US domestic toy sales totaled about $22 billion in 2012, according to the trade group.

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