Mattel Inc. dominates the market for dolls with its Barbie, Monster High and American Girl brands. But now it also wants to play with blocks.
The El Segundo, Calif., toy giant is paying $460 million to buy Canadian construction toy company Mega Brands as it pursues what it calls a “strategic imperative” to grow beyond the categories upon which it has relied for years.
The acquisition essentially heralds a turf war between Mattel and Danish company Lego, which makes the popular plastic bricks currently being featured on screen in box-office king “The Lego Movie.”
Lego said Thursday that its global sales rose 10 percent last year even as the toy industry slipped slightly. Mattel, though larger by revenue, said its revenue was up 1 percent for the year.
Mattel Chief Executive Bryan Stockton sees Mega as “a great near-term growth driver” and a “meaningful core brand” down the line, he told analysts in a conference call Friday.
“The acquisition will allow us to enter the construction category quickly and gives us a solid foundation to strengthen our business in the category,” he said.
Barbie sales have been stumbling in recent quarters. Hot Wheels revenue seems to have lost its spark. And across the industry, demand for action figures has struggled. Mattel also owns toy maker Fisher-Price, which has major operations in East Aurora.
But construction toys are growing, and fast. The sector – of which Mattel has less than a 1 percent share – brings in about $4 billion in the U.S. and Europe.
The playthings appeal to boys and girls, and are said to have educational benefits. It is “the single largest toy category where Mattel does not play,” the company said.