Playing Well Together

Mergers and acquisitions involving makers of toys, many of them key licensees, have been occurring at a fast pace in 2018. The first three of the following examples took place in late May, while the last two were announced in March and February, respectively:

• PlayMonster, marketer of Yeti in My Spaghetti and Wonder Crew, purchased U.K.-based Interplay. The two companies had been working together since 2016, when PlayMonster licensed Interplay’s My Fairy Garden brand. According to PlayMonster, the deal enhances the scope of categories it sells and strengthens its profile globally.
• Jazwares, owned by Alleghany Capital, acquired plush maker Russ Berrie, whose brands include Russ Berrie and Applause. Russ Berrie had acquired Applause in 2004 after the latter’s bankruptcy. The two brands, most recently owned by Larsen & Bowman Holdings and Maple Licensing Ltd., came to Jazwares through its Zag Toys affiliate, of which Jazwares acquired a majority interest in February.
• University Games bought the Haywire Group, giving the latter better access to international markets. The two board game marketers are known for products that combine entertainment and education.
• Spin Master purchased plush maker Gund from Balmoral Funds-owned collectibles marketer Enesco. The deal gives Spin Master an increased footprint in infant toys and specialty gifts and further diversifies its product assortment, the company said at the time of the announcement. Spin Master has acquired nine companies since its 2015 initial public offering.
• Basic Fun! acquired K’Nex. The latter markets the K’nex, Tinkertoy, and Lincoln Logs brands and was suffering after the closure of Toys ‘R’ Us. Both companies have a complementary portfolio of STEM toys. Basic Fun! is the new name of the merged Bridge Direct and Tech 4 Kids, which joined forces in 2017; Bridge had purchased longtime toyco Basic Fun and its then-owner Good Stuff in 2013, as well as science kit company Milton Toys in 2017.

Consolidation in the toy industry has been ongoing for some time, and the reasons behind the individual mergers and acquisitions are multifaceted and unique to each situation. But the Toys ‘R’ Us bankruptcy and the subsequent closure of all of its stores earlier this year (except in countries such as Germany and Canada, where the regional operations have new owners and remain in business under the TRU name) certainly has been a catalyst for this most recent burst of deal-making.

These larger, merged toy companies will be better positioned for success if they can compete globally, offer a wider array of brands and products, and keep costs and prices down through operational synergies. Among other benefits, these qualities will give them more clout to negotiate for shelf space with the remaining retailers and etailers of toys, notably Walmart, Target, and Amazon.