Mattel: Takeover Speculation is Boosting Share Price

Mattel Toys

The share of the toy giant Mattel (MAT) climbed rapidly in recent days. This was not only due to stronger than expected quarterly figures. In addition, takeover rumors boosted the share. On Wednesday alone, the share closed with a plus of 10%.

Mattel – One of the Top Dogs Among Toy Manufacturers

The US company Mattel is one of the world’s leading toy manufacturers. After Lego and Hasbro, Mattel is the world’s third-largest player in this market by sales.

The company’s best-known products include Barbie dolls, Fisher-Price toys, Matchbox cars and games such as Scrabble and Uno. Mattel is also a licensee of a number of entertainment brands such as SpongeBob, Winnie the Pooh, CARS, Toy Story and Harry Potter.

Mattel products are produced either in its own factories or by independent manufacturers. The company has its largest production facilities in China, Indonesia, Malaysia, Thailand, Italy and Mexico. 

Mattel’s product line is distributed worldwide. In addition to its headquarters in El Segundo, California, the company has offices in the U.S., Central and South America, Europe and the Asia-Pacific region.

The Rumor Mill is Bubbling – Takeover Speculation is Doing the Rounds

Among other things, emerging takeover rumors were decisive for the recent jump in the share price. As reported by the often well-informed Wall Street Journal, there have been informal talks with private equity firms such as Apollo Global and L Catterton.

According to media information, however, the talks are still at an early stage. The company itself denied any comment that could have shed light on the matter.

It Would Not Be The First Offer

Takeover speculations have already occurred several times in recent years and these were partly very concrete. In 2019, for example, Mattel rejected an offer from rival MGA Entertainment. In addition, there have already been several offers from the largest competitor Hasbro. However, the last takeover attempt by a rival was five years ago.

Hasbro itself had become the target of activist Alta Fox in recent months. The major investor has been applying pressure to force the spin-off of the division that produces Dungeons & Dragons (known as Wizards of the Coast and Digital Gaming). Hasbro, however, has so far successfully refused the demands.

Mattel With Strong Start To The Year

Meanwhile, business at Mattel is running like clockwork. Sales estimates for the first quarter were exceeded. In addition, the toy giant reported a surprising profit to start the year.

Net sales climbed 26% in North America. Gross sales increased 13% in constant currency, driven by growth in action figures, building sets, games and other (including Jurassic World, Lightyear and MEGA), vehicles (including Hot Wheels), infants, children and preschoolers (including Fisher-Price and Thomas & Friends) and dolls (including Barbie and Polly Pocket).

Increases were even stronger in operating earnings before interest, taxes, depreciation and amortization (EBITDA), which rose to $165 million (+79%).

Company Management Brimming With Confidence

The games giant is also optimistic about the rest of the year. Management expects market share gains and revenue growth of between 8% and 10%. Accordingly, sales of between $5.88 and $6 billion should go through the books. In the end, earnings of $1.42 to $1.48 per share should be achieved.

The stock market value is currently $8.2 billion. Mattel is thus valued at 1.3 times sales and 16 times expected earnings. In the event of an offer, the buyer would then probably have to step it up a notch.

Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.
Dr. Gregor Bauer
Dr. Gregor Bauer
Dr. Gregor Bauer credits his trading success to combining fundamental aspects of a trade with expert technical analysis. A Certified Financial Technician from the International Federation of Technical Analysts (IFTA), he’s rated as one of Germany’s top 300 economic experts.

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