Authentic Brands circles Mattel with $6 billion-plus takeover interest; shares jump 19%

Authentic Brands Group has approached Mattel and discussed a takeover valuing the Barbie maker at more than $20 a share -- around $6 billion or more -- the Wall Street Journal reported, sending Mattel shares up 19% in their biggest gain in over seven years.

The approach

Barbie's maker has a suitor. Authentic Brands Group has approached Mattel and been privately discussing an offer that could value the toymaker at more than $20 a share, or around $6 billion or more, the Wall Street Journal reported Thursday, citing people familiar with the matter.

Investors piled in. Mattel shares rose 19% to $15.04 on Thursday, their biggest percentage gain in more than seven-and-a-half years, after the Journal reported the approach. The pop came off a market value of about $3.6 billion -- the discussed price implies a premium of roughly two-thirds.

Not a deal yet

The headline discipline matters here: this is an approach, not a deal. There is no guarantee Mattel will be receptive or the two sides will reach an agreement, the people cautioned, and another suitor could still emerge. A formal sale process isn't currently under way. Mattel and Authentic Brands did not respond to Reuters' requests for comment.

A CEO handover and an impatient shareholder

The timing is delicate. Mattel is mid-transition: Ynon Kreiz is stepping down as chairman and chief executive to become co-CEO of Paramount, and board member Roger Lynch -- the Conde Nast chief executive -- becomes chairman on Friday and takes over as CEO within the next month. Lynch's pending arrival could complicate any deal as he works out his own strategy.

The pressure has been building. Before Thursday's pop, Mattel stock had lost more than 30% of its value this year -- and it peaked over a decade ago. Southeastern Asset Management has been pressing the company to raise funds from a private-equity investor or sell itself entirely.

The brand-licensing logic

Authentic's interest makes a certain kind of sense. The brand-licensing giant's business is acquiring distressed brands and undervalued intellectual property -- recent deals include Lee and Guess -- and making money by licensing the names. Mattel's catalog, headlined by Barbie, Hot Wheels, and American Girl, fits the template. Analysts who cover the company have long argued the sum of its brands exceeds the value of the company as a whole.

Mattel has been struggling to grow beyond toys and into entertainment, even after the 2023 Barbie movie showed how valuable its IP can be on screen. For Authentic, the pitch is simple: the brands are worth more than the stock says. For Mattel's board, the question is whether $20-plus a share is the right price -- or just the opening one.