Mattel (NASDAQ: MAT ) acquiring another toy business might sound about as exciting as clean-up time. But shelling out $460 million in cash for Canada’s MEGA Brands is no mismatch. By acquiring MEGA, Mattel gains a foothold in what’s proven thus far to be an elusive construction-play market for the toy giant.
At the heart of Mattel’s acquisition is its entry into the toy construction segment dominated by No. 1 Lego, whose sales in 2013 jumped 10% to $4.6 billion, and No. 2 MEGA Brands, with annual sales eclipsing $400 million. Mattel has primarily been watching from the sidelines, with not even a 1% share. And while tablets and game consoles may have changed the rules, kids still play with traditional toys.
Read more about whether Mattel has contradicted their brand strategy here.
