L Catterton, a private equity firm backed by luxury goods giant LVMH, has approached Mattel, the toy maker that makes Barbie and Hot Wheels, with a takeover bid, people familiar with the matter said on Monday.
The move could encourage other potential bidders to consider making offers for Mattel, including rival Hasbro Inc. Hasbro has learned of L. Catterton’s bid and is considering whether to submit a takeover bid, one of the people said. Hasbro and Mattel have been in failed merger talks for years.
The people cautioned that it was unclear whether L. Catterton’s approach would persuade Mattel to consider a sale, and asked not to be identified because the matter is confidential.
A Mattel spokesman said the company does not comment on speculation. “We are very confident in Mattel’s strategy and its ability to create long-term shareholder value as an independent company,” the spokesman said.
Hasbro also declined to comment, and L. Catterton did not respond to a request for comment.
Mattel shares rose 20 percent to $19.49 after the Reuters report, giving the toy maker a market capitalization of $6.5 billion. The stock closed 15 percent higher at $18.68. Hasbro shares rose 1.4 percent to $59.85.
Mattel is turning to media partnerships to make up for sluggish demand for its toys. Despite the commercial success and acclaim of the Barbie movie released last year, the company’s shares have fallen 23% in the past 12 months as investors worry about Mattel’s profitability and handling of its unprofitable toy franchises.
The El Segundo, California-based company said in April it had posted a smaller-than-expected first-quarter loss thanks to strict cost controls amid sluggish sales.
Activist investor Barrington Capital in February called on Mattel to consider options for its Fisher-Price and American Girl brands and to pursue reforms, including separating the CEO and chairman roles.
L Catterton, which has $34 billion in assets under management, has made more than 250 investments in consumer brands since it was founded in 1989, according to its website. In 2016, the firm partnered with LVMH and the family office of LVMH CEO Bernard Arnault to sell a stake.
Hasbro is also taking cost-cutting measures.
The Play-Doh maker reported in April a smaller-than-expected drop in first-quarter sales and a sharply better-than-projected profit, helped by lower inventory and stable digital-game revenue.
Last year, Hasbro agreed to sell its film and TV studio eOne to Lionsgate Entertainment for about $500 million as part of an effort to focus on more profitable brands. Hasbro shares have performed better than Mattel’s, which has fallen 9% over the past 12 months.
Mattel and Hasbro inked a partnership last year to produce co-branded toys and games based on their popular brands, including a Barbie-branded Monopoly game and a Transformers-branded UNO game. Analysts say a merger between the two companies could create a lot of value but would also face significant antitrust hurdles.
