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

Building blocks generate about $4 billion in annual sales


Mattel MATOn 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.

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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.

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