Mattel’s stock up on reports of buyout

Mattel Inc. had its biggest gain in 18 months on news that the toymaker is in preliminary talks with at least two private equity firms about a potential buyout.

The maker of Barbie and Hot Wheels has held very early-stage discussions with Apollo Global Management Inc. and L Catterton, people familiar with the matter said late Tuesday. The company hasn’t been shopping itself, said the people, who asked not to be identified because the discussions are private.

The shares jumped as much as 13% on Wednesday, their biggest intraday gain since October 2020, giving the company a market value of about $8.7 billion. The Wall Street Journal reported on the talks earlier Tuesday.

Mattel, the second-largest U. S.- based toymaker after Hasbro Inc., has been turned around under the direction of Chief Executive Officer Ynon Kreiz. The company, which was set to report financial results after the close of trading Wednesday earned $903 million on sales of nearly $5.5 billion last year. The toymaker’s shares have far outpaced Hasbro in the four years since Kreiz took over.

Mattel recently won back Walt Disney Co.’s princess dolls business from Hasbro. In addition to rationalizing Mattel’s toy manufacturing operations, Kreiz has boosted the business by promoting products in film and TV shows. Warner Bros. on Tuesday announced a July 2023 release date for a new film adaptation of Barbie that was been in the works for some time.

Private equity firms have a lot of cash they’ve been looking deploy. A deal could allow for more aggressive growth for the company after a turnaround that’s resulted in lower leverage and a near investmentgrade credit profile, according to Bloomberg Intelligence analyst Lindsay Dutch.