Mattel acquires HIT Entertainment for $680 mn
This transaction will marry Mattel’s global marketing capabilities with HIT Entertainment’s global programming and licensing expertise.
Mattel, Inc. has entered into an agreement to acquire HIT Entertainment for $680 million in cash from a consortium led by Apax Partners funds. HIT Entertainment owns a global portfolio of popular pre-school brands, including Thomas & Friends, Barney, Bob the Builder, Fireman Sam and Angelina Ballerina. With more than $180 million of revenues, HIT Entertainment represents one of the largest independent owners of preschool intellectual property.
“This transaction will marry Mattel’s global marketing, distribution and brand management capabilities with HIT Entertainment’s global programming and licensing expertise to accelerate growth of the combined portfolio,” said Robert A Eckert, Chairman and Chief Executive Officer, Mattel.
Mattel currently markets many Thomas & Friends toy products under a license from HIT Entertainment, which extends through 2014. Mattel’s global sales of Thomas & Friends die-cast and plastic toys are more than $150 million, and Mattel believes that this transaction will allow the company to continue to expand and grow these product lines into the foreseeable future. Another key advantage to the acquisition is that Mattel will be able to reunite two key pieces of the Thomas & Friends toy business: plastic and die-cast toys with the wood-based business. The current wood license expires at the end of 2012, at which time Mattel expects to add that line of business to its portfolio. Historically, the sales of wood-based toys have been around half the size of the plastic and die-cast business.
The acquisition does not include HIT Entertainment’s interest in the cable network station, Sprout. The transaction is expected to be financed with a combination of cash and debt and is expected to close in the first quarter of 2012. The transaction is not expected to have a material impact on Mattel’s 2012 earnings, but is expected to be increasingly accretive as the benefits of owning these brands are reflected in Mattel’s results, including the addition of Thomas & Friends wood business in 2013 and retention of Thomas & Friends plastic and die-cast business from 2015 onwards.
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