Hasbro Inc. has made a takeover offer for rival Mattel Inc., according to people familiar with the matter, a potential combination that would unite the two biggest USA toy makers and put Barbie and G.I. Joe under the same roof.
A tie-up would create a toy powerhouse, uniting Hasbro's brands, which also include My Little Pony, with Mattel's Barbie dolls and Hot Wheels toys.
The stance by Mattel toward Hasbro related to this approach is not known and it remains far from being certain a deal will eventually materialize, said the source, who asked to remain anonymous since the matter was confidential.
A new combined entity would have pricing power that it could use to negotiate with entertainment studios and over movie and television franchises.
The Wall Street Journal was the first to report Hasbro's latest approach to Mattel.More news: TPP nations 'have made good progress' on deal, no-show 'a misunderstanding'
With a market cap around $11 billion, Hasbro is approximately twice the size of Mattel's $5 billion.
Mattel's shares were up 24.74 per cent in after-hours trading to $18.25, while Hasbro's were up more than three per cent to around $94.
The takeover offer comes as Mattel has encountered weak sales following the September bankruptcy of Toys "R" Us, the U.S.'s largest toy retailer. Mattel's shares have slumped 47 percent this year, valuing the company at $4.8 billion and making it more vulnerable as a takeover target.
"Both companies would benefit from a merger, but Mattel stockholders might oppose a deal that values the company on its depressed stock price, " said Erik Gordon, a professor at the University of Michigan's Ross School of Business. According to The Wall Street Journal, Hasbro is said to be on the prowl (pun) again, after substantiated news just a year ago, about the two companies being in talks.