NEW YORK (MarketWatch) — Mattel Inc., the world’s largest toy maker, said Wednesday it will acquire Radica Games Ltd. for $230 million in cash.
will pay $11.55 a share for Radica
a Bermuda toy maker headquartered in Hong Kong that is best known for its 20Q electronic game series. The acquisition price represents a 12% premium to Radica’s Tuesday closing price.
For its most recent fiscal year, Radica reported income of $10.5 million on sales of $162.8 million.
Mattel, of El Segundo, Calif., boasts a wide portfolio of toys, including Barbie, Hot Wheels and American Girl.
“The addition of Radica to the Mattel portfolio provides Mattel the opportunity to partner our global brands with Radica’s technological expertise to better participate in the burgeoning electronic toys arena,” said Robert Eckert, Mattel’s chairman and chief executive, in a news release.
Mattel has an uneven record with acquisitions. Fisher-Price, Tyco remote control vehicles and American Girl dolls were successes, while its $3.5 billion buyout of Learning Co., an educational software company, failed. Mattel ended up essentially giving Learning Co. away in exchange for future profits.
Citigroup analyst Elizabeth Osur said Mattel’s acquisition is a fairly small move, but signals a strategic shift toward allocation of some capital toward mergers and acquisitions, versus the cash returns to shareholders through dividends and buybacks that have been the company’s policy for the last few years.
“Overall we view the deal as attractively priced with likely synergies, but given management’s mixed track record in product innovation and potentially lower margins for electronic toys versus dolls, investors might prefer to see increased buybacks over M&A,” said the analyst in a note to clients.
The deal is expected close in the fourth quarter, pending shareholder and regulatory approval.
Shares of Mattel finished the session unchanged at $17.82. Radica’s stock rose 9.7%, or $1, to close at $11.31.
View more information: https://www.marketwatch.com/story/mattel-buys-radica-games-for-230-mln-in-cash