Hasbro and Mattel merger rumors surfaced on Thursday. The two toy giants merging could be a matter for review by the Federal Trade Commission. If the federal government decides a monopoly could materialize, the deal could be thwarted — if the merger murmurings are accurate.
Selling toys is a bit of a cutthroat business. Hasbro, Mattel, and their smaller competitors must keep up with the changing whims of children, be granted exclusive rights to sell movie merchandise, and push out high-tech gadgets that have become all the rage with the under-12 set.
— The Detroit News (@detroitnews) February 5, 2016
Children become loyal to a specific product line for only so long, making the race to be on top of the latest trends is never ending for toy makers like Hasbro and Mattel, MSN notes. Budgetary concerns that online sellers are putting on traditional brick-and-mortar stores are also reportedly a concern.
If Hasbro and Mattel merge, the makers of Hot Wheels, Frozen, Barbie, My Little Pony, Disney Descendants, Nerf Play-Doh, Transformers, Monster High, and WWE toys will all be made under one label. Lego, another massive toy manufacturer, will likely be the largest single-label toymaker left. The size of the Lego company appears to prevent at least some of the monopoly concerns, which the government cold raise over a Hasbro Mattel merging deal.
Mattel is attempting to breathe new life into its Barbie business. The company lost a significant portion of market share to Lego and Hasbro in recent years, Bloomberg reports. The re-release of the My Little Pony brand by Hasbro has reportedly been a huge hit with little girls and may be cutting into the number of Barbie doll sales. Hasbro currently has the right to sell Star Wars-branded toys and will soon be garnering the Disney Frozen licensing away from Mattel.
Hasbro officials approached Mattel about a possible merger during the latter days of 2015, Bloomberg reports. The two toy giants have reportedly chatted about such a proposition multiple times in the past. The merger talks may or may not lead to a deal this time around. No details about the restructuring such a massive undertaking would entail have yet leaked out to the public. Representatives from both Mattel and Hasbro have declined to comment on the merger rumors.
Mattel’s revenue was $6.0 billion and Hasbro’s revenue was about $4.3 billion in 2014, according to the most recent statistics available. The American toy market reportedly grew to $19.45 billion in 2015. In 2014, market sales generated $18.23 billion in revenue.
Government regulatory powers over businesses are currently being used to attempt to block a merger between Office Max/Office Depot and Staples recently. Federal officials also blocked AT&T from buying out T-Mobile, and stepping in to urge Spring and T-Mobile not to merge. The New York Stock Exchange and the Nasdaq were also prevented from merging.
— Infinite Earths (@IEarths) February 4, 2016
The Sherman Antitrust Act makes it illegal for any contracts or related business deal to “unreasonably restrain” trade. The act also prohibits price fixing among competitors and the rigging of bids. Violations of the act can be criminally charged as felonies. The Federal Trade Commission Act makes it illegal to engage in “unfair” methods of competition in the interstate commerce realm but does not carry the weight of felony prosecution when such instances occur. The Clayton Act is a civil statute that makes acquisitions or mergers that will potentially decrease competition, against the law.
What do you think about the Hasbro Mattel merger rumors?
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