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Scoop: Barington eyes Mattel’s strategic options

A picture of a hand holding an American Girl doll in a box

Photo by Tim Boyle/Getty Images

Mattel activist Barington sees toy manufacturers as the most attractive buyers for the company's Fisher-Price and American Girl brands, a source close to the firm's thinking says.

Why it matters: Barington said it wants Mattel to focus more on its core assets — fashion dolls and vehicle toys, which are buoyed by an IP-led strategy.

Catch up quick: Barington has built an undisclosed stake in the company and is looking to boost Mattel's lackluster stock (currently trading at about $19 a share), per its letter to CEO Ynon Krei.

The big picture: The company in its third quarter earnings call said it may have some "flexibility to consider M&A."

  • However, if they buy more brands, "they're just going to be distractions rather than getting more out of what they've already got," the source says.

State of play: While the M&A market slowed in the past year, deals involving premium brand names spurred some activity.

  • Toymakers who license brands instead of own them — Jakks Pacific, for example — make logical prospective buyers, as owning a strong brand would help differentiate them from competition, the source notes.
  • Plus, "for a brand that's weathered, you could get a pretty good price," the source says.

Zoom in: There's even more potential in Mattel licensing some of its core brands, the source says.

  • Mattel plans to open theme park Mattel Adventure Park in Glendale, Arizona this year.
  • "We've seen from Disney how you can make money from theme parks," the source says.

Between the lines: Barington has had its share of successful campaigns. See L Brands, which spun off into Victoria's Secret and Bath & Body Works, Olive Garden parent Darden Restaurants, and Outback Steakhouse parent Bloomin' Brands.

  • The company recently entered into a cooperation agreement with Hanesbrand, which got the company to overhaul its board and the launch of a sale process for its Champion business.

What they're saying: "We look forward to engaging with Barington as we do with all our shareholders. We welcome this initial outreach and we are reviewing their letter," a Mattel spokeswoman said in an emailed statement, in response to Barington's letter.

Barington and Mattel did not respond to Axios' request for comment.

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