Mattel CEO may put deal-making as priority Uno

Mattel

08/10/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Sebastian  Pellejero
NEW YORK, Oct 7 (Reuters Breakingviews) - Mattel MAT.O is winding up another turnaround just as shareholders are pushing for an exit. Ariel Investments, which owns roughly 5% of the toymaker behind Hot Wheels and Uno, is the latest to urge management to consider a sale. Licensing giant Authentic Brands is eyeing a takeover worth over $7 billion, according to the Wall Street Journal. Incoming Mattel Chief Executive Roger Lynch deserves to make his case for staying public, but years of struggle means he is starting with a weak hand.
Lynch has his work cut out for him. The blockbuster "Barbie" movie that paired Warner Bros' studio with Mattel's iconic doll has faded, and the potential of other other such partnerships hasn't materialized. Tariffs and inflation are driving up costs and revenue has stagnated. Mattel's shareholder return has lagged rival Hasbro HAS.O for the better part of a decade.
Authentic is known for snapping up distressed brands such as Brooks Brothers and Reebok, and then licensing them to companies that make and sell products. More deals could add royalties without manufacturing costs, lifting revenue and margins.
At a mooted $20 a share, a buyout looks doable. Assume Authentic funds the deal, which would value Mattel's enterprise at $7.5 billion, with 40% debt. That would put its leverage ratio at 3.4 times projected 2026 EBITDA of nearly $900 million, per Visible Alpha. Apply an 7.2% interest rate, in line with similarly rated borrowers, and suppose sales grow 2% while the buyer can increase Mattel's EBITDA margin two percentage points to 17% over five years. A sale at the same multiple it paid would imply a 15% annualized return before fees, Breakingviews calculates.
Mattel already licenses its brands but competitor Hasbro is making better moves. A mobile Monopoly game managed by an outside partner brought in $168 million last year, while sales of its own Magic: The Gathering game jumped 59%. Shares trade at 14 times expected fiscal 2027 earnings, compared with 10 times for Mattel, according to Visible Alpha.
Even if Mattel meets analysts' forecasts and Lynch persuades investors to award it Hasbro's price-to-earnings multiple, it would only boost the stock to around $21 a share. Getting investors to play along is beyond next level.
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CONTEXT NEWS
Investment firm Ariel Investments, a major shareholder in Mattel, urged the Barbie maker on October 5 to explore a sale as its performance and profitability has stalled, according to a letter seen by Reuters. Shares of Mattel rose roughly 19% on October 2 after The Wall Street Journal reported the company had attracted takeover interest from Authentic Brands Group at more than $20 per share.
Mattel named on September 30 Roger Lynch as its new chairman and chief executive replacing Ynon Kreiz. Lynch was director at Mattel and previously served as CEO of publisher Conde Nast. Kreiz was named co-chief executive of Paramount Skydance on the same day. 

(Editing by Jennifer Saba; Production by Maya Nandhini, Pranav Kiran)
((For previous columns by the author, Reuters customers can click on PELLEJERO/ Sebastian.Pellejero@thomsonreuters.com))