Hasbro (HAS) is not playing around. One of the largest companies in the toy industry is looking to acquire major competitor Mattel (MAT), according to a report from The Wall Street Journal. Mattel reportedly rejected Hasbro’s first offer, but we could still see more effort to make a deal happen.
This is not the first time Hasbro and Mattel have considered a combination. The two sides have failed to come to terms in the past, but conditions today make a deal more appealing than ever. The toy industry has been thrown into a state of uncertainty over the past few years for a number of reasons, including:
- The precipitous decline in revenue and profitability for Mattel.
- Increased competition from a number of different sides.
- Shifting trends among distribution partners.
A Hasbro/Mattel merger could address some of these concerns and create significant profit growth opportunities through cross-licensing, increased bargaining power, and cost control. Hasbro already has a place on our Focus List of high-conviction long ideas, and a successful merger with Mattel could make it an even better buy – assuming the price does not go to high.
