If Hasbro Inc. acquired Mattel Inc. , not only would it combine the two biggest toy companies in the world, it would enhance the unified company’s negotiating power with retailers, according to Fitch Ratings. Wal-Mart Stores Inc. would continue to be the biggest customer with $2 billion in sales. At the end of fiscal 2016, Wal-Mart, Toys R Us and Target Corp. accounted for about 19%, 10% and 8% of combined sales respectively. “These retailers are constantly encouraging high levels of competition among suppliers, demanding innovative new products and exclusive products, leading to price reductions, and product delivery with shorter lead times,” wrote Fitch’s consumer companies analyst Ellen Itskovitz in a note. “Fitch expects a merged entity would have improved negotiating power and can weather the complex retail landscape more effectively.” Fitch also thinks the merger would bring together the strength in girls’ toys that Mattel has with the boys’ toys strength at Hasbro. Mattel shares are down 36% for the year so far, but up 20.7% for the week to date. Hasbro shares are up 24.5% for 2017 to date and up 5.9% for the week to date. The S&P 500 index is up 15.5% for 2017 so far.
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