Mattel, Inc. (MAT) will be adding Thomas the Tank Engine and Bob the builder to its toy chest after yesterday’s news.
This California-based company said it is going to buy UK-based HIT Entertainment for $680 million from Apex Partner Funds, private-equity firm. The agreement, expected to close in early 2012, is the first major acquisition by Mattel since its purchase of American Girl LLC for $700 million in 1998.
By acquiring HIT Entertainment, Mattel would own the major iconic Thomas & Friends brand that is based on the Railways Series books. In addition, it will own Barney, Bob The Builder, and Angelina Ballerina.
“Mattel is the right home for Thomas & Friends,” said Mattel’s CEO Robert A. Eckert said in a statement. “Thomas & Friends routinely ranks among the world’s leading preschool toys.”
Mattel has worked with HIT Entertainment in the past, marketing Thomas & Friends’ die-cast and plastic toys. Those toys have sold for more than $150 million worldwide. The company hopes that by acquiring HIT Entertainment, it will be able to expand on these products and take advantage of HIT Entertainment’s wood-based business.
There are some additional benefits to the acquisition for Mattel according to Ruth Mortiner’s column on MarketingWeek. Mattel already has a strong presence in the female toy market with its Barbie products but by owning Thomas the Tank Engine properties it can market to a wider unisex audience.
In addition, it will allow Mattel more competitive in the pre-school toy market after Hasbro, Inc. (HAS) got the rights to make toys based on Elmo and other Sesame Street characters.
“They couldn’t afford to lose Thomas after losing Sesame Street,” said Agee & Leah Inc. analyst Margaret Whitfield in a Bloomberg article.
Columnist Quentin Webb wrote that the acquisition is not without risks. HIT Entertainment has been successful in creating characters, shows and licensing products. Mattel however is mainly known for designing toys and might not be able to use HIT Entertainment’s skills to its effectively.
But even if under Mattel, HIT Entertainment were able to create more characters, the current children’s television market makes it harder for new characters to gain an audience. There are less and less TV slots open for new characters to make an appearance according to Dan Sabbagh at the Guardian.
Regardless, some fans are eager to see what Mattel will do with the much beloved characters that HIT Entertainment already has at its disposal.
“Personally, I’d like to see Mattel bring back more trains from the Railway Series to public view – Skarloey was always my favourite,” wrote Mortimer.