Mattel announces acquisition of HIT Entertainment
24 October 2011
California, 24 October 2011
Mattel, Inc. (NASDAQ:MAT) announced today that it has entered
into an agreement to acquire HIT Entertainment for $680 million in
cash from a consortium led by Apax Partners funds. HIT
Entertainment owns a global portfolio of popular pre-school brands,
including Thomas & Friends®, Barney®, Bob the Builder®, Fireman
Sam® and Angelina Ballerina®. With more than $180 million of
revenues, HIT Entertainment represents one of the largest
independent owners of pre-school intellectual property. The
purchase price equates to a multiple of about 9 ½ times trailing
earnings before interest, tax, depreciation and amortization.
"Mattel is the right home for Thomas & Friends®. This
powerhouse brand is joining the ranks of such iconic brands as
Barbie®, Hot Wheels®, Fisher-Price® and American Girl®," said
Robert A. Eckert, chairman and chief executive officer of
Mattel. "Thomas & Friends® routinely ranks among the
world's leading pre-school toys. Additionally, with more than
half of the Thomas & Friends® revenue generated from non-toy
products, this transaction will marry Mattel's global marketing,
distribution and brand management capabilities with HIT
Entertainment's global programming and licensing expertise to
accelerate growth of the combined portfolio."
"HIT Entertainment owns some of the most loved and trusted
pre-school brands in the world and under Mattel's leadership, I
look forward to seeing them grow to even greater heights," said
Jeffrey D. Dunn, president and chief executive officer of HIT
Entertainment. "Mattel is a wonderful steward of brands and a
great home for the outstanding properties HIT has developed and
grown, including Thomas & Friends®. It is fitting that the
world's premier toy company should become the owner of the world's
premier pre-school property."
Irina Hemmers, a partner in the Apax Media team, commented: "We
are very pleased that this strong portfolio of iconic brands will
continue to flourish in the hands of Mattel. Fisher-Price
already produces HIT's toys under license so the two companies know
each other well and there is considerable industrial logic in this
combination. I would like to thank the employees and the management
team for ensuring that HIT's brands achieved their leading global
position in the pre-school character space. We wish the whole
company every success for the future."
Thomas & Friends® is the premier brand in the HIT
Entertainment portfolio. Created more than 65 years ago, the brand
has grown into the #1 licensed pre-school property in the world,
with television programming, home entertainment products, toys and
other consumer products available throughout the globe.
Mattel currently markets many Thomas & Friends® toy products
under a license from HIT Entertainment which extends through 2014.
Mattel's global sales of Thomas & Friends® die-cast and
plastic toys are more than $150 million, and Mattel believes that
this transaction will allow the company to continue to expand and
grow these product lines into the foreseeable future. Another
key advantage to the acquisition is that Mattel will be able to
reunite two key pieces of the Thomas & Friends® toy
business: plastic and die-cast toys with the wood-based
business. The current wood license expires at the end of
2012, at which time Mattel expects to add that line of business to
its portfolio. Historically, the sales of wood-based toys
have been around half the size of the plastic and die-cast
business.
The HIT Entertainment portfolio also includes a number of other
highly popular pre-school brands with established television
broadcast and licensing relationships around the world. The
acquisition does not include HIT Entertainment's interest in the
cable network station, Sprout.
Eckert went on to say, "We work in a creative business and
understand the value of strong and talented leaders, teams, and
people. HIT Entertainment has a great talent base with strong
competencies in content production, management and licensing.
The addition of the HIT Entertainment team will complement our
licensing business and also augment our capabilities on the content
side."
The transaction is expected to be financed with a combination of
cash and debt and is expected to close in the first quarter of
2012. The transaction is not expected to have a material
impact on Mattel's 2012 earnings, but is expected to be
increasingly accretive as the benefits of owning these brands are
reflected in Mattel's results, including the addition of Thomas
& Friends® wood business in 2013 and retention of Thomas &
Friends® plastic and die-cast business from 2015 onwards.
The transaction is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act and other customary
closing conditions. RBC Capital Markets, LLC acted as
financial advisor and Latham & Watkins LLP served as legal
advisor to Mattel in connection with the transaction. BofA
Merrill Lynch acted as financial advisor and Weil, Gotshal &
Manges LLP served as legal advisor to HIT Entertainment in
connection with the transaction.
Live Webcast
In conjunction with the announcement, Mattel will webcast a
Securities Analyst and Investor conference call at 11 a.m. Eastern
time today. The conference call will be webcast on the
"Investors & Media" section of Mattel's corporate Web site:
http://corporate.mattel.com/. To listen to the live call, log
on to the Web site at least 15 minutes early to register, download
and install any necessary audio software.
An archive of the webcast will be available on Mattel's Web site
for the next 90 days and may be accessed beginning two hours after
the completion of the live call. A telephonic replay of the call
will be available beginning at 2 p.m. Eastern time on October 24
until October 28 at midnight Eastern time and may be accessed by
dialing (404) 537-3406. The passcode is 21259901.
Note to Media:
A video news release and B-roll associated with this
announcement can be found at http://investor.shareholder.com/mattel/events.cfm.
About HIT Entertainment
HIT Entertainment is one of the world's leading independent
children's entertainment producers and rights-owners. HIT's
portfolio includes properties, such as Thomas &
Friends™, Barney™, Bob the Builder™,
Fireman Sam™, Angelina Ballerina™, Mike the
Knight™, Pingu™ and Rainbow Magic™. Launched in 1989,
HIT's lines of business span television and video production,
content distribution, publishing, consumer products licensing and
live events and has operations in the UK, US, Canada, Hong Kong and
Japan. HIT is a part-owner of US-based pre-school channel,
Sprout®. For more information, visit www.hitentertainment.com.
About Apax Partners
Apax Partners is one of the world's leading private equity
investment groups. It operates across the United States,
Europe and Asia and has more than 30 years of investing
experience. Funds under the advice of Apax Partners total
over $40 billion around the world. These Funds provide
long-term equity financing to build and strengthen world-class
companies. Apax Partners Funds invest in companies across its
global sectors of Tech & Telecom, Retail & Consumer, Media,
Healthcare and Financial & Business Services.
About Mattel
As the worldwide leader in play, the
Mattel family comprises such best-selling brands as
Barbie®, the most popular fashion doll ever introduced,
Hot Wheels®,
American Girl® and
Fisher Price® brands, which includes
Little People®,
Power Wheels® and a wide array of entertainment-inspired toy
lines. In 2011, Mattel was named as one of FORTUNE Magazine's "100
Best Companies to Work For" for the fourth year in a row, and was
also ranked among Corporate Responsibility Magazine's "
100 Best Corporate Citizens." With worldwide headquarters in El
Segundo, Calif., Mattel employs approximately 31,000 people in 43
countries and territories and sells products in more than 150
nations. At Mattel, we are "Creating the Future of Play." Follow
Mattel on
www.facebook.com/mattel and
www.twitter.com/mattel.
Note: This press release contains
forward-looking statements on a variety of matters, these include,
without limitation, uncertainty as to whether and in what timeframe
the transaction will be completed; the failure of either party to
meet the closing conditions set forth in the definitive agreement;
the expected benefits of the proposed transaction; Mattel's
post-transaction plans, objectives, expectations and intentions;
the ability to retain key personnel both before and after the
transaction closes; the extent and timing of regulatory approvals;
ongoing relations between HIT Entertainment and its suppliers,
customers and other parties; and costs and other issues with
respect to integrating HIT Entertainment, its products and its
employees into Mattel and achieving expected synergies. These
forward-looking statements are based on the current beliefs,
expectations and assumptions of Mattel and HIT Entertainment
management with respect to future events and are subject to a
number of significant risks and uncertainties. Additional factors
that may cause results to differ materially from those described in
the forward-looking statements are described in Mattel's periodic
filings with the Securities and Exchange Commission, including the
"Risk Factors" section of Mattel's Annual Report on Form 10-K for
the fiscal year ended December 31, 2010 and Mattel's Quarterly
Reports on Form 10-Q for fiscal year 2011, as well as in Mattel's
other public statements. Neither Mattel nor HIT Entertainment
updates forward-looking statements and expressly disclaims any
obligation to do so.
Contacts:
Apax Partners
Ben Harding
Tel: +44 (0) 20 7872 6401
Email: communications@apax.com
Georgiana Brunner
Tel: +44 (0) 20 7872 6429
Email: communications@apax.com
Mattel
Lisa Marie Bongiovanni
Tel: +310-252-3524
Email: LisaMarie.Bongiovanni@mattel.com
Sarah Allen (UK)
Tel: +44 (0) 1628 500 121
Email: Sarah.Allen@mattel.com
Securities Analysts
Drew Vollero
Tel: +310 252 2703
Email: Drew.Vollero@mattel.com
HIT Entertainment
Patricia Lodge
Tel: +44 (0) 207 554 2566
Email: PLodge@HITEntertainment.com