Mattel to Acquire 'Thomas & Friends' Maker HIT Entertainment for $680 Million
The owner of brands, such as Barney, Bob the Builder and Fireman Sam, is one of the largest independent owners of intellectual property for preschoolers.
NEW YORK - Toy giant Mattel said Monday it has agreed to acquire U.K. kids entertainment producer and right owner HIT Entertainment, known for Thomas the Tank Engine, among others, for $680 million in cash from a consortium led by private equity firm Apax Partners.
The deal gives Mattel more exposure to television and video production. HIT's preschool brands include Thomas & Friends, Barney, Bob the Builder, Fireman Sam and Angelina Ballerina, some of which are featured in TV shows and video releases. HIT is also a part-owner of 24 hour U.S. preschool channel PBS Kids Sprout together with Comcast, PBS and Sesame Workshop.
Apax had bought the company for 489 million pounds ($890 million) in 2005.
With more than $180 million in annual revenue, the companies said HIT is one of the largest independent owners of intellectual property for preschoolers.
Mattel already markets many Thomas & Friends toy products under a license from HIT that runs through 2014. Mattel said Monday that its global sales of Thomas & Friends die-cast and plastic toys are worth more than $150 million, and the acquisition will allow it to continue to expand and grow the product lines. Mattel will also add wood-based toys, which are under license through the end of 2012, to its toy line as of 2013, saying sales here have been around half the sales of the plastic and die-cast business.
“Mattel is the right home for Thomas & Friends” said Mattel chairman and CEO Robert Eckert. “This powerhouse brand is joining the ranks of such iconic brands as Barbie, Hot Wheels, Fisher-Price and American Girl. Thomas & Friends routinely ranks among the world’s leading preschool toys."
Added Eckert: "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.”
Said Jeffrey Dunn, president and CEO of HIT: “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.”
Thomas & Friends is the number one licensed preschool property in the world, with television programming, home entertainment products, toys and other consumer products available around the globe.
The transaction is expected to close in the first quarter of 2012 and is not expected to have a material impact on Mattel’s 2012 earnings, while being "increasingly accretive as the benefits of owning these brands are reflected in Mattel’s results," the companies said.