Buyout firm L Catterton approaches Mattel with acquisition offer, sources say

Lions Gate Entertainment

22/07/2024 18:53

(Adds Mattel comment, paragraph 4, background, paragraphs
13-14)
    By Anirban Sen
       NEW YORK, July 22 (Reuters) - L Catterton, the private
equity firm backed by luxury goods giant LVMH  LVMH.PA , has
approached Mattel  MAT.O , the toy maker behind Barbie and Hot
Wheels, with an acquisition offer, people familiar with the
matter said on Monday.
    The move could prompt other potential suitors to consider
bids for Mattel, including rival Hasbro  HAS.O , which has
become aware of L Catterton's approach and is discussing whether
it should also submit an offer, one of the sources said. Hasbro
and Mattel have held unsuccessful merger talks over the years. 
    The sources cautioned that there is no certainty L
Catterton's approach will push Mattel into exploring a sale and
asked not to be identified because the matter is confidential.
    A Mattel spokesperson said the company does not comment on
speculation. "We are very confident in Mattel's strategy and our
ability to create long-term shareholder value as a standalone
company," the spokesperson said.
    Hasbro declined to comment, while L Catterton did not
respond to a request for comment. 
    Mattel shares jumped 20% to $19.49 following the Reuters
report of the approach, giving the toy maker a market value of
$6.5 billion. Hasbro shares rose 4% to $61.25.
    Mattel has been turning to media partnerships to offset
tepid demand for its toys. Despite the commercial success and
acclaim of the Barbie movie released last year, its shares had
lost 23% of their value in the last 12 months, as investors
fretted about Mattel's profitability and handling of
unprofitable toy franchises.
    The El Segundo, California-based company posted a
smaller-than-expected loss for the first quarter in April,
helped by its tight leash on costs while it grapples with weak
sales.
    Activist investor Barington Capital in February called on
Mattel to pursue changes, including exploring options for its
Fisher-Price and American Girl brands and separating the roles
of CEO and chairman.
    L Catterton, which has $34 billion in assets under
management, has made more than 250 investments in consumer
brands since its launch in 1989, according to its website. In
2016, the firm partnered with LVMH and the family office of LVMH
CEO Bernard Arnault, and sold a stake to them. 
    Hasbro has also taken steps to reduce expenses.
    The Play-Doh maker reported a smaller-than-expected drop in
first-quarter sales in April and handily beat profit estimates,
helped by leaner inventories and steady digital gaming revenue.
    Last year, Hasbro agreed to sell its eOne film and TV studio
to Lions Gate Entertainment  LGFa.N  for about $500 million as
part of its push to focus on more profitable brands. Hasbro's
shares have performed better than Mattel's, down 9% in the last
12 months.
    Mattel and Hasbro reached a partnership agreement last year
to create co-branded toys and games from some of their most
popular brands, including Barbie-branded Monopoly games and
Transformers-branded UNO games. Analysts have said a merger
between the two companies could unlock a lot of value but also
face major antitrust obstacles. 

 (Reporting by Anirban Sen in New York; Additional reporting by
Abigail Summerville in New York; Editing by Bill Berkrot)
 ((Greg.Roumeliotis@thomsonreuters.com; +1 646 223 6022; Reuters
Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))