Mattel investor asks CEO to consider go-private or sale as toy demand weakens

May 8 (Reuters) – Mattel investor Southeastern Asset Management has called on CEO Ynon Kreiz to explore strategic options for the toy maker to be taken private or bought ​out by rival Hasbro amid weak demand.

The global asset ‌manager holds about 4%, or $170 million of Mattel’s common stock, and has been an investor in the company for more than eight years, it said in an open letter to Kreiz on Thursday.

A deal between Mattel and ‌rival ​Hasbro was possible at this moment, Southeastern ⁠said, as the two ⁠companies have been engaged in on-an-off talks for decades.

In the face of weak demand for traditional toys and supply-chain bottlenecks, Mattel has been growing its IP-centered family entertainment business through films ​like “Masters of the Universe” and “Matchbox” following the success of “Barbie” movie.

The company last week posted a bigger adjusted operating loss of $70 ⁠million from $8 million a year ago ⁠for the three months through March. However, it topped ​quarterly sales expectations.

“Hasbro has done a better job executing on digital ​growth than Mattel and therefore has more credibility in ‌this important part of the business,” the letter said.

“We believe synergies between the two companies would be material, creating a stronger player in a global industry.”

Mattel said it was focused on executing ⁠its plans around the IP-forward strategy. Hasbro did not immediately respond to a Reuters request for comment.

“We appreciate Southeastern’s continued engagement with the ⁠company, including our ‌conversations this year,” Mattel said in a filing.

“The ⁠board regularly reviews the company’s strategy, performance, and ​opportunities ‌to enhance long-term value, and will continue to ​consider the ⁠views expressed in Southeastern’s letter.”

Southeastern also said Mattel’s business could be better suited to being privately held.

A third option would be large media companies who would value Mattel’s IP assets better than the public market, the investor said.

(Reporting by Juveria Tabassum in Bengaluru; Editing ​by Arun Koyyur)