Buyout firm L Catterton makes takeover offer to Mattel, sources say

L Catterton, the private equity firm backed by luxury goods giant LVMH, has approached Mattel, the maker of Barbie and Hot Wheels toys, with a takeover offer, people familiar with the matter said on Monday.

The move could prompt other potential suitors to consider bids for Mattel, including rival Hasbro, which learned of L Catterton’s approach and is considering whether to make a bid as well, one of the sources said. Hasbro and Mattel have been in unsuccessful merger talks for years.

The sources cautioned that it was uncertain whether L. Catterton’s approach would prompt Mattel to consider a sale, and requested anonymity due to the confidential nature of the matter.

A Mattel spokesman said the company does not comment on rumors or speculation. Hasbro also declined to comment, and L Catterton did not respond to a request for comment.

Mattel shares rose 20% to $19.49 after Reuters reported the deal, giving the toy maker a market value of $6.5 billion. Hasbro shares rose 4% to $61.25.

Mattel has turned to media partners to offset lukewarm demand for its toys. Despite the commercial success and acclaim for the Barbie movie released last year, its shares have lost 23% of their value in the past 12 months as investors fret over Mattel’s profitability and management of underperforming toy franchises.

The El Segundo, California-based company reported a narrower-than-expected first-quarter loss in April, hit by tight cost controls and weak sales.

Activist investment firm Barington Capital in February called on Mattel to make changes, including considering options for its Fisher-Price and American Girl brands and separating the roles of CEO and chairman of the board.

L Catterton, which has $34 billion in assets under management, has made more than 250 investments in consumer brands since it launched in 1989, according to its website. In 2016, the firm partnered with LVMH and the family office of LVMH CEO Bernard Arnault and sold a stake to them.

Hasbro has also taken steps to reduce expenses.

The maker of Play-Doh in April reported a smaller-than-expected decline in first-quarter sales and significantly beat profit estimates, helped by lower inventories and stable revenue from digital games.

The company’s shares have outperformed Mattel’s, falling 9% over the past 12 months.