Private equity firms discuss potential buyout of toy maker Mattel

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US-based private equity firms Apollo Global and L Catterton have each held talks with Mattel, the maker of Barbie dolls and Fisher-Price toys, about a potential buyout of the $7.8bn Nasdaq-listed company.

The takeover interest in Mattel is preliminary, said multiple sources familiar with the matter, and was unsolicited, indicating that any prospective deal is in an early stage and could still fall apart.

It also comes as shares in El Segundo, California-based Mattel have sold off with broader markets in recent months despite the company’s return to profitability and growth under chief executive Ynon Kreiz, frustrating the company.

Mattel has not made a decision to hire bankers to advise on a potential transaction, said the sources, who did not indicate the price at which the private equity buyers would be willing to buy the company.

Mattel, Apollo Global and L Catterton declined to comment. Talks of a potential takeover were first reported by the Wall Street Journal.

Mattel, which was founded in 1945, makes toys such as Barbie, Hot Wheels and its Fisher-Price brand that have become a staple of American life. However, it has struggled financially for much of the past decade before undergoing a turnround under Kreiz, who was named chief executive in 2018.

Kreiz restructured the company by shedding a third of Mattel’s workforce and revamping its manufacturing supply chain in a bid to revive profits. His efforts to win back licenses for its intellectual property and pursue an ambitious plan to turn the company’s famous toys and games into valuable digital media and entertainment assets have helped bolster growth.

Last year, the company’s sales rose 19 per cent to $5.5bn and its free cash flow doubled to $334mn.

In coming years, Mattel’s toys and games will be increasingly linked to films, led by the planned 2023 release of a Barbie movie starring actress Margot Robbie. The company plans to produce over a dozen other movies and will continue expanding into television, digital games and even live music events.

Mattel is set to release its first-quarter earnings on Wednesday.

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