Hasbro Inc. has approached rival Mattel Inc. with a takeover offer, said a source close to the situation on Friday, the most recent attempt to bring together the two largest toymakers in the U.S.
If a deal were reached, it would create a huge powerhouse in the toy industry, uniting Monopoly, Nerf and My Little Pony brands from Hasbro with Mattel’s Hot Wheels and iconic Barbie.
A new combined entity would have pricing power that it could use to negotiate with entertainment studios and over movie and television franchises.
The stance by Mattel toward Hasbro related to this approach is not known and it remains far from being certain a deal will eventually materialize, said the source, who asked to remain anonymous since the matter was confidential.
Both Mattel and Hasbro declined to make a comment.
Shares in Mattel reacted positively to the news as they shot up by 24% during Friday afterhours trading. Hasbro shares were up 3.3%.
Hasbro has an $11 billion market value following its increase of 18% in stock price since the start of 2017. Shares of Mattel have dropped by 47% during the year, valuing the business at just over $4.8 billion and making it a target for a takeover.
The bankruptcy filing in September by Toy “R” Us, the largest toy retailer in the U.S., highlighted struggles that the sector is facing including children’s preferences shifting from traditional toys to electronics and online competition increasing.
Mattel has cited the bankruptcy as one reason it has experienced weaker sales. Mattel in late October announced the suspension of its dividend.
CEO Margo Georgiadis, who took the reins in January, has warned the business would miss its revenue forecast for the full year. Mattel stock fell on that day to its lowest since 2009.
One analyst in the toy industry said that both companies would enjoy benefits from merging, but stockholders at Mattel may oppose such a deal that valued their company on a recently depressed share price.
Mattel and Hasbro have held talks a number of times in the past, including as long ago as 1996 and as recently as late in 2015.
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.
If completed that deal would have given Hasbro a much needed direct line to Hollywood with more television shows and movies tied to toy brands.