Merger and acquisition activity has been pretty sparse in toy circles in recent times.
Back in the 1980s Hasbro snaffled the Playskool and MB companies followed by Kenner Parker Tonka in the 1990s, the same decade in which Mattel flexed its muscles. The company scooped up Fisher Price and Tyco, since when everything has gone pretty quiet on the M&A front.
Part of the reason for this reticence might be the memory of Mattel's infamous M&A deal when it spent $3.5 billion in 1999 to buy The Learning Company. This led to the downfall of CEO Jill Barad and the acquisition was losing Mattel as much as $1.5 million a day by the year 2000.
Mattel's reasoning behind the purchase was to become a major player in the burgeoning entertainment and educational software market, but they didn't understand what they were buying or appreciate the ebb and flow of a very different business to that of toys.
The Holy Grail of acquisitions would be that of LEGO and I was once given inside information that exploratory talks had taken place between representatives of the Danes and a publicly quoted US company.
LEGO had been struggling, intractable in its belief that licensing was not for them, but everything changed when they became a Star Wars licensee in 1999. Until then, LEGO had stubbornly refused to play by the same rules as the rest of the toy industry.
The LEGO bid for Star Wars construction toy licensing rights was never really in any doubt. I visited K'NEX at their US head office in Hatfield, Pennsylvania and saw some of the models that formed their Star Wars pitch: spindly, frail looking attempts to create models of an X-Fighter and Millennium Falcon. Not at all impressive. Originally, it was only licensed to LEGO from 1999 to 2008, but it has been extended multiple times: most recently in 2012 when another ten-year agreement was signed.
The current takeover debate in toy circles has been sparked by a rather alliterative headline in the US press: Toy Industry Terrified of Tablets.
The omnipotence of tablets in daily life has influenced the lives of children. In much the same way that smartphones are de rigeur nowadays, tablets are fast becoming everyday items and the toy industry is already along for the ride.
Kurio, Tabeo, InnoTab, Arnova, Fuhu and Oregon Scientific are just some of the brands that have thrown their hat into the ring so far, but one brand stands out above all others and the smart money is currently backing Mattel to bid for LeapFrog.
Says Will Ashworth of Investopaedia, speaking as if a deal is inevitable: "The acquisition is potentially as important as Mattel's purchase of Fisher Price was."
Oh, and then there's all the talk of Disney's interest in Hasbro now that it owns Lucasfilm, but that's another story...
