A major Mattel shareholder is calling for the toymaker to explore strategic alternatives, as the company deals with a sliding stock and a chief-executive transition. Ariel Investments, which has a 5.4% stake in Mattel, said Monday it believes the company’s shares remain significantly undervalued with its current structure as a public company. Chairman and Co-CEO John Rogers said in a letter to Mattel’s board that a strategic buyer would pay a significant premium to the current share price.
Ariel said it believes Mattel should retain an independent financial advisory firm to explore strategic alternatives, which could include a divestiture, merger, or outright sale. The Journal reported last week that Authentic Brands Group has made an approach and been privately discussing an offer that could value the company at more than $20 a share. The takeover report followed a surprise succession announcement: Mattel named Condé Nast Chief Executive Roger Lynch its next CEO, succeeding Ynon Kreiz. Shares of Mattel jumped 19%, to $15.04, after the report of Authentic’s approach.
Mattel’s valuation is strikingly low, analysts said, considering the equity of brands such as Barbie and Hot Wheels. Southeastern Asset Management earlier this year also called for a sale, arguing the brands would be better off with a private-equity firm or large media company. Ariel expressed confidence in Lynch but said the timing is ripe for a deal, as Wall Street continues to undervalue Mattel and the regulatory climate is open to major transactions.
Source: Wall Street Journal US Business · Summarized by HeadlinesBriefing