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Rumors surface of toy maker merger

Many a Florida business has merged with another business, acquired another business, or even been the subject of an acquisition. These key business deals can sometimes be challenging in part because of concerns about violating antitrust laws if the size of a newly combined company would then account for an exceptionally large portion of that industry’s market. This concern could be realized if a merger between toy makers Hasbro, Inc. and Mattel, Inc. were to get underway.

In 1996, Mattel did approach Hasbro with a purchase offer but rescinded it because of antitrust issues. At different points over the years, a merger of these companies has been discussed but has yet to happen. Recent reports suggest that talks may be underway again. It is unsure exactly what the motivations would be for such a move but an improved ability to withstand increasing competition from other toy manufacturers or gaming companies could be one reason. So too could the ability to have better leverage in obtaining licenses for other companies’ products, such as those from The Walt Disney Company.

Some analysts believe that if Mattel and Hasbro joined forces, they would realize little increase in sales. However, the new and larger operation could attain improved profits from economies of scale and operational efficiencies. Reducing duplicate operations, for example, could produce significant cost savings. Together, a blended business could account for as much as 30 percent of the U.S. toy market.

Whether or not a Mattel-Hasbro merger occurs remains to be seen but the lessons here can be learned by many other Florida businesses. Working with counsel to appropriately understand the ramifications of any business merger or acquisition can be helpful for owners and executives.

Source: Los Angeles Times, “Wary response to report of Mattel, Hasbro merger,” James F. Peltz and Shan Li, February 5, 2016

 

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