The reason for the deal: Mattel was feeling a little too wed to Barbie. She accounts for nearly 50 percent of the $1.9 billion company’s sales, making it dependent on the fickle preteen market. Fisher-Price, meanwhile, needed more foreign exposure. Mattel’s distribution networks in 31 countries should solve that problem. When the deal is done, FisherPrice will account for about 30 percent of Mattel’s sales.
The alliance is the latest step in the toy industry’s consolidation. Since the mid-1980s a flurry of acquisitions has left a handful of players with the financial strength and marketing savvy to satisfy big customers like Toys “R” Us and WalMart. Hasbro controls about 16 percent of the $9.3 billion U.S. toy market with brand names like Tonka, Milton Bradley and G. I. Joe and Cabbage Patch Kids. Fisher-Price has only 5 percent of the overall market but is No. 1 with preschoolers. Mattel paid a premium for its well-known name and is likely to put it on a variety of toys using Disney characters it has under license. “Mattel is committed to growing the brand by staying focused on products for children under 6,” says FisherPrice CEO Ronald Jackson. If Mattel can put up more cash without losing the Fisher-Price cachet, even the Yuppiest of parents should be happy.
