Mattel, Inc. says it plans a $460 million US friendly takeover of Canadian toy maker Mega Brands Inc. that will help it corner the world's construction set market.
The Montreal company's Mega Bloks is No. 2 brand in the world after Lego but about 70 per cent of its overall revenue comes from the United States and Canada, while Mattel has a much bigger reach.
Mattel — maker of Barbie dolls, Hot Wheels cars and numerous other toys — says Mega Brands will help it expand in two of the fastest-growing product segments: construction sets and arts and crafts.
Bryan Stockton, Mattel's chairman and CEO, said Mega Brands also brings the Rose Art arts and craft products, product-development expertise and manufacturing capability.
To remain in Montreal
"It's Montreal headquarters, which we plan to maintain, has proven category expertise with strong skills in a variety of functions including marketing, design, development and engineering," Stockton said following the announcement on Friday.
Stockton said Mattel plans to invest in the Montreal plant and said it was "one of the key reasons that we're buying this great company".
The takeover offer values the Montreal-based company at US$460 million, including debt that Mattel will assume or repay.
Mattel is offering $17.75 Cdn cash per share of Mega Brands and has the support of shareholders with 39 per cent of Mega Brands stock.
The cash portion of the offer was about 35 per cent above the recent market price for Mega Brand shares, which closed Thursday at $13.07 on the Toronto Stock Exchange.
Mega Brands stock rises
Following the announcement, Mega Brands shares opened at $17.77. In New York, Mattel shares opened at $37.22 US on the Nasdaq market, up from the Thursday close of US$37.15.
Marc Bertrand, the president and CEO of Mega Brands as well as a significant shareholder, said Mattel is the "ideal partner" to help his company grow to the next level.
"We are confident Mattel's scale and global platform spanning 150 markets — combined with the expertise of our people in the construction and arts and crafts categories — will create tremendous growth opportunities for our brands."