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

by Christopher Freeburn | February 28, 2014 10:38 am

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

Mattel Watch Out, LEGO! Mattel Buys Toy Block Maker Mega Brands[1]On Friday, toy-maker¬†Mattel (MAT[2]) announced that it will purchase the second largest maker of children’s building blocks[3].

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.

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[4]) entered the market its with own building block brand, KRE-O, in 2011.

Last month, Mattel reported lower holiday sales[5] 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.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2012/04/Mattel.jpg
  2. MAT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MAT
  3. the second largest maker of children’s building blocks: http://www.businessweek.com/news/2014-02-28/mattel-bids-460-million-to-buy-building-toy-maker-mega-brands
  4. HAS: http://studio-5.financialcontent.com/investplace/quote?Symbol=HAS
  5. reported lower holiday sales: http://investorplace.com/2014/01/disappointing-barbie-hot-wheel-sales-batter-mattel-stock/#.UxCrRdxhOf0

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