Mattel buying Canadian toy maker Mega Brands for $460m

Mattel Inc. has acquired Canadian toy maker Mega Brands Inc., which has the world’s No. 2 line of construction sets after Lego.

The deal values the Montreal-based Mega Brands at US$460 million, including debt that the El Segundo, Calif.-based Mattel will assume or repay.

According to a statement from Mattel – the maker of Barbie dolls, Hot Wheels cars, and a variety of other toys – Mega Brands will help it expand in two of the fastest-growing product segments: construction sets and arts and crafts.

In addition to its original Mega Bloks franchise, Mega Brands offers arts and craft products under the Rose Art and other brands, which will be added to Mattel’s own offerings in that product category.

“A key pillar of our global growth strategy is the strategic acquisition of brands that will both benefit from our scale and help extend our reach into new and growing categories,” Bryan Stockton, Mattel’s chairman and CEO, said in the statement. “The construction play pattern is popular, universal and has had one of the fastest growth rates over the past three years. We look forward to helping Mega Brands accelerate its global growth, providing more choices for more children and their families.”

Mattel plans to keep the Mega Brands head office in Montreal and to invest in its manufacturing operations, which he said are integral to the business. As of 2013, Mega Brands was molding more than half of its toys in Montreal, where approximately 1,200 employees work in an 830,000-square-foot facility. The company reported sales of about US$405 million in 2013.

Stockton also said Mattel will be able to contribute a more extensive distribution reach outside of North America, where Mega Brands has most of its sales, and plans to spend more on marketing than the smaller company has done in the past.

Marc Bertrand, the president and CEO of Mega Brands, said Mattel is the “ideal partner” to help his company grow to the next level. “We are confident Mattel’s scale and global platform spanning 150 markets — combined with the expertise of our people in the construction and arts and crafts categories — will create tremendous growth opportunities for our brands,” Bertrand said.