Watch Out, LEGO! Mattel Buys Toy Block Maker Mega Brands

Building blocks generate about $4 billion in annual sales

   

Watch Out, LEGO! Mattel Buys Toy Block Maker Mega Brands

Mattel Watch Out, LEGO! Mattel Buys Toy Block Maker Mega BrandsOn Friday, toy-maker Mattel (MAT) announced that it will purchase the second largest maker of children’s building blocks.

Mattel says it will pay C$17.75 a share for Montreal-based Mega Brands, valuing the acquisition at $460 million. Mega Brands’ board of directors and major stakeholders have approved the merger, Bloomberg notes.

abc blocks toys kids school 630 200x200 Watch Out, LEGO! Mattel Buys Toy Block Maker Mega Brands
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The Mattel-Mega Brands combination signals a rising challenge to Lego, which is the top seller of snap-together building blocks. Mega Brands is second biggest snap-together building block-maker after Lego. Mattel has had a licensing deal with Mega Brands since 2012.

Toy building block sales amount to about $4 billion annually. Toy rival Hasbro (HAS) entered the market its with own building block brand, KRE-O, in 2011.

Last month, Mattel reported lower holiday sales and missed Wall Street’s fourth-quarter earnings forecasts.

MAT stock climbed modestly in Friday morning trading. MAT stock has over the past 12 months.


Article printed from InvestorPlace Media, http://investorplace.com/2014/02/watch-lego-mattel-buys-toy-block-maker-mega-brands/.

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