Barbie and Thomas really HIT it off in Mattel deal
Published 25/10/2011 | 05:00
THOMAS the Tank Engine has moved in with Barbie, Fisher-Price and American Girl after Mattel agreed to buy HIT Entertainment, the firm that owns the iconic British brand, for $680m (€490.6m).
HIT, which is being sold by a consortium led by private equity group Apax, also owns Barney, Bob the Builder and Angelina Ballerina.
The transaction will be financed with a combination of cash and debt and is expected to be completed in the first quarter, El Segundo, California-based Mattel said yesterday in a statement.
The deal won't have a material impact on 2012 earnings, the company said.
Acquiring Thomas will increase the company's pre-school offerings after a licence to make toys based on 'Sesame Street' characters such as Big Bird and Elmo moved from Mattel to rival Hasbro this year, said Margaret Whitfield, an analyst for Sterne Agee & Leach in New York.
"They couldn't afford to lose Thomas after losing Sesame Street," Whitfield said.
HIT Entertainment's ability to create multimedia content may also help Mattel improve current brands such as Monster High, Ms Whitfield said.
Mattel, the owner of brands including Barbie and Hot Wheels, rose 1.6pc to $28.14 in New York.
London-based Apax, which acquired HIT Entertainment in 2005 for £489m, was seeking about $1bn for the company, three people familiar with the matter said in February, after the company reported losses in 2009.
HIT Entertainment has more than $180m of revenue and the purchase price represents 9.5 times the company's earnings before interest, tax, depreciation and amortization, Mattel said.
Mattel already had HIT's licence to make plastic and die-cast toys based on the Thomas brand.
Mattel hasn't made a major acquisition since the 1990s when it purchased Fisher-Price Inc for $1.09bn in 1993, Tyco Toys Inc for $755m in 1996 and American Girl LLC for $700m in 1998.