By Anirban Sen
NEW YORK (Reuters) – L Catterton, the private equity firm backed by luxury goods giant LVMH, has approached Mattel (NASDAQ:), the toymaker behind Barbie and Hot Wheels, with a takeover offer, people familiar with the matter said on Monday.
The move could prompt other potential suitors to consider a bid for Mattel, including rival Hasbro (NASDAQ:), which has become aware of L Catterton’s approach and is discussing whether it should also make a bid, one of the sources said . Hasbro and Mattel have had failed merger talks over the years.
The sources cautioned that there is no certainty that L Catterton’s approach will prompt Mattel to explore 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 have great confidence 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 rose 20% to $19.49 after the Reuters report on the crackdown, giving the toymaker a market value of $6.5 billion. Hasbro shares rose 4% to $61.25.
Mattel is turning to media partnerships to offset tepid demand for its toys. Despite the commercial success and fame of the Barbie movie released last year, the shares had lost 23% of their value over the past twelve months as investors worried about Mattel’s profitability and its handling of unprofitable toy franchises.
The El Segundo, California-based company posted a smaller-than-expected first-quarter loss in April, helped by tight cost control as it struggles with weak sales.
Activist investor Barington Capital called on Mattel in February 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 launching in 1989, according to its website. In 2016, the company 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 costs.
The Play-Doh maker in April reported a smaller-than-expected decline in first-quarter sales and easily beat profit expectations, helped by smaller inventories and stable digital games revenue.
Last year, Hasbro agreed to sell its eOne film and TV studio to Lions Gate Entertainment for about $500 million as part of its push to focus on more profitable brands. Hasbro’s shares have outperformed those of Mattel, down 9% in the past twelve 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 could also face major antitrust hurdles.
