After months of speculation about the fate of HIT Entertainment as well as its list of potential suitors and estimated value, the saga of who will own the popular Thomas brand along with other properties has ended as global toy company and brand licensor

April 6, 2018

4 Min Read

After months of speculation about the fate of HIT Entertainment as well as its list of potential suitors and estimated value, the saga of who will own the popular Thomas brand along with other properties has ended as global toy company and brand licensor Mattel announced early this morning that it will acquire the preschool entertainment company.

Mattel will buy of the largest independent owners of preschool intellectual properties from a consortium led by Apax Partners for $680 million in cash estimated at 9.5 times earnings before taxes. This represents an amount much lower that the $1.5 billion price tag reported when the sale of HIT was first announced more than a year ago. The transaction is expected to close in the first quarter of 2012 and, according to Mattel, will not have a material impact on the company’s 2012 earnings.

The acquisition strengthens Mattel’s position in pre-school and offers several new opportunities to expand globally with Thomas and other brands that have growth potential. It represents the first major acquisition since the 1990s when Mattel purchased Fisher-Price in 1993, Tyco Toys in 1996 and American Girl in 1998.

Furthermore, the acquisition will allow Mattel to expand HIT’s brands across multi-platforms, live entertainment and co-branding as it is doing for its existing brands including Barbie, Hot Wheels, and Monster High.

(The June issue of License! Global features an exclusive cover story about Mattel’s global strategies and initiatives and will further provide background and insight into how the company might incorporate the HIT portfolio of preschool brands. )

“Mattel is the right home for Thomas & Friends. This powerhouse brand is joining the ranks of such iconic brands as Barbie, Hot Wheels, Fisher-Price and American Girl,” says Bob Eckert, chairman and chief executive officer of Mattel. “Thomas & Friends routinely ranks among the world’s leading preschool toys. Additionally, with more than half of the Thomas & Friends revenue generated from non-toy products, this transaction will marry Mattel’s global marketing, distribution and brand management capabilities with HIT Entertainment’s global programming and licensing expertise to accelerate growth of the combined portfolio.”

According to Mattel, Hit Entertainment will be folded into the company’s Fisher-Price toy division.

The deal represents Mattel, the No. 4 ranked licensor, according to License! Global’s exclusive Top 125 Global Licensors Report, acquiring the No. 27 ranked global licensor. Mattel reported $7 billion in global retail sales of licensed products and HIT Entertainment reported $1.9 billion in global retail sales of licensed products.

“HIT Entertainment owns some of the most loved and trusted preschool brands in the world and under Mattel’s leadership, I look forward to seeing them grow to even greater heights,” says Jeff Dunn, president and chief executive officer of HIT Entertainment. “Mattel is a wonderful steward of brands and a great home for the outstanding properties HIT has developed and grown, including Thomas & Friends. It is fitting that the world’s premier toy company should become the owner of the world’s premier pre-school property.”

HIT Entertainment's portfolio of preschool brands, which includes Thomas & Friends, Barney, Bob the Builder, Fireman Sam, Angelina Ballerina, and Mike The Knight, accounts for more than more than $180 million in revenue. The acquisition does not include HIT Entertainment’s interest in the cable channel Sprout.

Thomas & Friends is currently the No. 1 licensed preschool property in the world, with television programming, home entertainment products, toys and other consumer products available throughout the globe. It is estimated that the Thomas brand represents 80 percent of HIT Entertainment’s profits.

Mattel currently markets Thomas & Friends toy products under a license from HIT Entertainment, which extends through 2014. According to Mattel, global sales of Thomas & Friends die-cast and plastic toys are more than $150 million, and the toy company believes that this transaction will allow it to continue to expand and grow these product lines into the foreseeable future.

Another key advantage to the acquisition is that Mattel will be able to add the wood-based toy business to its current offerings when the current wood license expires at the end of 2012. Historically, the sales of wood-based toys have been around half of the plastic and die-cast revenues.

Says Eckert: “We work in a creative business and understand the value of strong and talented leaders, teams, and people. HIT Entertainment has a great talent base with strong competencies in content production, management and licensing. The addition of the HIT Entertainment team will complement our licensing business and also augment our capabilities on the content side.”

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