UPDATE (11/16 12:40 PST):
Mattel (MAT) doesn’t appear to want to play with Hasbro (HAS). Both stocks are lower after Mattel reportedly rejected a takeover offer from rival Hasbro. Mattel told Hasbro the offer undervalues the company and didn’t factor in the potential rejection from anti-trust regulators. Mattel will reportedly continue to negotiate. (Yahoo financial)
It looks like Hasbro has their eye on Mattel once again. Many would think that the two companies combined would dominate the market. Realistically, the result of a combined Hasbro and Mattel would be a large company, but far from dominant in the fragmented toy industry. Together, they would control one third of the US market for traditional toys and games, and just 22% globally. The rise of companies such as Lego, Funko, NECA, Just Play, and others are starting to offer a counterbalance with their growing market share.
With such a low barrier to entry, the toy sector is filled with inventors and small companies hoping to land the next big hit. Mattel has a whole show featuring them on ABC called The Toy Box. This merger would definitely raise their concerns for success in the industry. These inventors and smaller firms would have one less buyer to pitch their ideas too. Other major companies like Disney and Warner Bros. would no longer be able to pit the two against each other for the best potential licensing deal. For us consumers, this means retailers have a supplier with much greater power when it comes to pricing their goods.
It was stated earlier that a combined Hasbro and Mattel would rule one third of the US market. But when we break the categories down, together they would carry much more weight in certain categories. Die cast vehicles is one example, with Mattel’s Hot Wheels line, the two would combine for 62% of the market share. They would own a little more than half of the US action figure and doll market. They also both own quite a few big name licenses, like rival Marvel and DC, that would now all be under one roof.
For now the only antitrust issue I see being presented to regulators is the deal would make it easier to raise prices. But for all these worries and what ifs to become a reality, the two need to stop talking and finally agree to terms.