Dive Brief:

• Mattel has talked with private equity firms interested in potentially buying out the toy giant, according to reports in The Wall Street Journal and Reuters that cited anonymous sources.
• The suitors include the Apollo Global Management and L Catterton, according to both reports.
• The Journal reported that talks are in an early stage and may not result in a transaction. Mattel and Apollo did not immediately reply to Retail Dive's request for comment. An L Catterton spokesperson declined to comment.

Dive Insight:

Mattel came through a disruptive 2021 with its sales up over 20% and its CEO declaring victory in its turnaround efforts of recent years.

“We have made significant progress on our transformation strategy over the last few years, and our turnaround is now complete,” Mattel chief Ynon Kreiz said in a statement back in February.

Despite widespread supply chain challenges, many toy companies benefited from trends put in motion by the pandemic. Amid school and daycare closures, and declines in youth activities and experiential spending, toy sales have popped. According to the NPD group, U.S. toy sales increased 13% to $28.6 billion in 2021, on top of strong growth in 2020. 

Mattel specifically has been gaining market share, with the fourth quarter marking its sixth straight period of share gains, Kreiz told analysts earlier this year. 

“Our products resonated with consumers at levels we have not seen in years," Kreiz said in February. "We have also been very successful in making Mattel a partner of choice for the major entertainment companies and see this as another growth lever." 

This year, Mattel's stock price has reached highs not seen since before Toys R Us filed for bankruptcy in 2017, which ended in the retailer's liquidation. The loss of the last national toy chain was a major hit to the industry, which toymakers have finally started putting behind them with the pandemic's boost to toy sales.

As of this writing, Mattel's market cap stands at around $8.6 billion, making for an expensive acquisition for any would-be buyer. That in turn could mean a lot of new debt on the toymaker's books — and all the financial and operational risks that come with it — if Mattel is taken over in a leveraged buyout. 

Apollo and L Catterton both have experience investing in consumer-facing companies. L Carrerton's past buyouts include Birkenstock, children's clothing brand Hanna Andersson, skin care brand Bliss and food brand Kodiak. Apollo in the past has owned Claire's, GNC, Linens 'N Things and Michaels, among others.

As Mattel talks with potential private equity buyers, rival Hasbro is under pressure from an activist investor that wants it to potentially spin off its valuable game unit, Wizards of the Coast.