A new report claims that Hasbro Inc. has made a takeover offer for its rival, Mattel Inc., although details surrounding the offer are now unknown. Despite its financial woes, brands like Fisher Price and Hot Wheels, which are still seen as valuable, are said to make Mattel "ripe for a takeover" by Hasbro.
Hasbro's approach was made recently, the WSJ said, citing one person.
Shares in Mattel reacted positively to the news as they shot up by 24% during Friday afterhours trading.
Toy companies, including Hasbro and Mattel, are finding it hard to sell toys to today's kids, many of whom would rather play with a tablet, according to commentators. Mattel's shares have slumped 47 percent this year, valuing the company at $4.8 billion and making it more vulnerable as a takeover target. Conversely, Hasbro shares have increased 8 percent bringing its market value to an impressive $11.4 billion.
The September bankruptcy of Toys "R" Us, the biggest USA toy retailer, highlighted the struggles facing the sector, including online competition and children's shifting preference for electronics over traditional toys. Mattel in late October announced the suspension of its dividend. Mattel stock fell on that day to its lowest since 2009.
Hasbro is attempting to diversify revenue streams, and has sought to acquire movie studio and entertainment business Lions Gate Entertainment, but the talks were ended without any deal coming to fruition.
That deal would have given Hasbro a direct pipeline into Hollywood, with more movies and TV shows tied to its toy brands.