Dive Brief:
- Ariel Investments, which has a 5.4% ownership stake in Mattel, is pushing the toy company to explore strategic alternatives, including a potential divestiture of assets, a merger or a sale, the global asset management firm wrote in a letter to the company.
- Ariel urged Mattel to retain an independent financial advisory firm to research these possibilities with the goal of “maximizing shareholder value,” per the letter from Ariel co-CEO John Rogers.
- Mattel “will consider the views expressed in Ariel Investments’ letter, as well as the views of Mattel’s other shareholders,” a company spokesperson said in an email to Retail Dive.
Dive Insight:
For the second time this year, a Mattel investor is demanding that the toy company consider strategic alternatives.
Investment management firm Southeastern Asset Management penned an open letter to Mattel this spring with a similar ask for the company to sell itself to private equity, another toy company or a media business.
In Monday’s letter to Mattel, Ariel acknowledged that Mattel has been undergoing a transformation.
“We have applauded improvements in operating performance, profitability and margins that have resulted from the outsourcing and diversification of manufacturing and supply processes,” Rogers wrote. “In spite of these gains, progress has stalled.”
Mattel said it appreciates “Ariel Investments’ longstanding investment in Mattel and their continued engagement. Our Board of Directors and management team are committed to acting in the best interests of all shareholders,” a spokesperson said.
Authentic Brands Group has reportedly expressed interest in a takeover of the company in an offer that would value Mattel at around $6 billion. In an email to Retail Dive, a Mattel spokesperson said that the company does not comment on market rumor or speculation. Authentic declined to comment on questions regarding an offer.
Mattel has been focused on a strategy of leveraging its intellectual property and accelerating its entertainment business. The company recently announced the launch of Mattel Game Studios, which will develop, publish and operate original interactive games inspired by its portfolio.
In its latest quarter, Mattel’s net sales were up 10% year over year to $1.1 billion. In the second quarter, the company reported a net loss of $18 million, compared to a net income of $53 million in the year-ago period. The company maintained its full-year guidance, with net sales expected to be up between 3% and 6%
The toy company recently named Roger Lynch as its next CEO, as Ynon Kreiz stepped down from the top role in order to join Paramount.
