Zuru co-founder Nick Mowbray is weighing a takeover bid for Mattel, the company behind Barbie and Hot Wheels, potentially adding another buyer to an increasingly crowded situation.
The privately held New Zealand toymaker has sought proposals from Australasian investment banks as it evaluates a possible acquisition, according to the Australian's DataRoom column.
Financing could be a major hurdle. Zuru generates roughly $1B in annual revenue, while another potential buyer has already placed Mattel's valuation near $6B. Mowbray did not immediately respond to questions about the report.
Another buyer could raise the stakes
Authentic Brands Group previously approached Mattel about a takeover at a reported $20 per share, valuing the toymaker at approximately $6B.
Authentic has been expanding into children's entertainment, making Mattel's portfolio of recognizable franchises a potential attraction. However, no formal sale process is underway, according to a person familiar with the matter.
Zuru's reported interest introduces the possibility of competing offers, although neither a formal bid nor a bidding contest has been confirmed.
Activists want Mattel to consider a sale
Ariel Investments, which owns a 5.4% stake in Mattel, has urged the board to consider strategic alternatives, including a sale, merger or asset divestiture.
Chairman John Rogers believes a buyer could pay a significant premium to Mattel's current valuation. Ariel argues that progress has stalled despite improvements in operating performance and margins.
Mattel's board has acknowledged the investor's concerns and indicated that shareholder feedback will factor into its evaluation of the company's future.
The pressure isn't new. Southeastern Asset Management made a similar push in May, making Ariel the second activist investor to press Mattel toward strategic changes this year.
Mattel's financial performance adds another complication. The company reported a second-quarter net loss of $18M despite a 10% increase in revenue, giving investors reason to question how quickly its turnaround can translate into stronger profits.
The leadership transition adds another layer of uncertainty. CEO Ynon Kreiz, who oversaw Mattel's turnaround and the success of the Barbie movie, is leaving to become co-CEO of the combined Paramount, Skydance and Warner Bros. Discovery business.
That media company is valued at roughly $110B and is targeting $6B in cost savings, with Kreiz responsible for daily operations and integration.
Roger Lynch is taking over Mattel at a particularly difficult moment, with activist investors pushing for a transaction and potential buyers examining the business.
The question is whether Lynch gets the opportunity to pursue his own turnaround strategy or finds himself negotiating a sale before that strategy can take shape.
