Hasbro Inc has made an approach to acquire rival Mattel Inc, a source familiar with the matter said yesterday, making it the latest attempt to combine the two biggest US toymakers in over two decades.
According to commentators, a deal would create a toy powerhouse, uniting Hasbro's My Little Pony, Monopoly and Nerf brands with Mattel's Barbie dolls and Hot Wheels toys with the combined company having more pricing power to negotiate with entertainment studios over TV and movie franchises.
Mattel has not given any indication over Hasbro's move and there is no certainty of a deal materialising, Reuters reported citing sources.
The Wall Street Journal was the first to report Hasbro's latest approach to Mattel. Mattel shares shot 24 per cent in after-hours trading, while shares of Hasbro shares rose 3.3 per cent.
''Both companies would benefit from a merger, but Mattel stockholders might oppose a deal that values the company on its depressed stock price,'' said Erik Gordon, a professor at the University of Michigan's Ross School of Business.
The two companies have engaged in talks several times over the years including in 1996 and again sometime in late 2015.
Toy companies, including Hasbro and Mattel, are finding it difficult to sell toys to today's kids, many of whom would rather play with a tablet, according to commentators.
Revenue at California-based Mattel has been declining since 2013, and its stock has lost around half its value since the beginning of the year.
Rhode Island-based Hasbro has fared better after taking over the rights from Mattel for Disney's "Princess" and "Frozen" dolls in late 2014.
Hasbro's stock rose 18 per cent this year, and the company has a market value of $11 billion - more than twice that of Mattel.