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Mattel (MAT.O) investor Southeastern Asset Management has called on CEO Ynon Kreiz to explore strategic options for the toy maker to be taken private or bought out by rival Hasbro (HAS.O) amid weak demand.
The global asset manager holds about 4%, or $170 million of Mattel's common stock, and has been an investor in the company for more than eight years, it said in an open letter to Kreiz on Thursday.
A deal between Mattel and rival Hasbro was possible at this moment, Southeastern said, as the two companies have been engaged in on-an-off talks for decades.
In the face of weak demand for traditional toys and supply-chain bottlenecks, Mattel has been growing its IP-centered family entertainment business through films like "Masters of the Universe" and "Matchbox" following the success of "Barbie" movie.
The company last week posted a bigger adjusted operating loss of $70 million from $8 million a year ago for the three months through March. However, it topped quarterly sales expectations.
"Hasbro has done a better job executing on digital growth than Mattel and therefore has more credibility in this important part of the business," the letter said.
"We believe synergies between the two companies would be material, creating a stronger player in a global industry."
Mattel said it was focused on executing its plans around the IP-forward strategy. Hasbro did not immediately respond to a Reuters request for comment.
"We appreciate Southeastern's continued engagement with the company, including our conversations this year," Mattel said in a filing.
"The board regularly reviews the company's strategy, performance, and opportunities to enhance long-term value, and will continue to consider the views expressed in Southeastern's letter."
Southeastern also said Mattel's business could be better suited to being privately held.
A third option would be large media companies who would value Mattel's IP assets better than the public market, the investor said.
