Dive Brief:
- Toy brand Melissa & Doug has agreed to be acquired by children’s entertainment company Spin Master Corp. for $950 million in cash, according to a Wednesday press release. The transaction is subject to regulatory approvals and customary closing conditions.
- The deal is expected to close during the first quarter of 2024, with Spin Master supporting it with about $450 million in balance sheet cash and $500 million in debt financing. Up to $150 million in extra contingent earnout consideration is available, subject to Melissa & Doug reaching certain financial targets for 2024 and 2025.
- Melissa & Doug generated $489 million in revenue during fiscal 2022. The company will join Spin Master’s children’s brand portfolio, which includes Paw Patrol, Rubik's Cube and more.
Dive Insight:
Spin Master’s latest acquisition is set to help expand its portfolio.
"What excites us so much about Melissa & Doug is the power of their brand, their deep knowledge in developmental play and their passion for creativity, imagination and sustainability," Max Rangel, Spin Master's global president and CEO, said in a statement. "As a trusted brand of early childhood toys with an evergreen portfolio, Melissa & Doug will expand Spin Master's presence in new categories, providing immediate revenue growth, broader reach in all retail channels and market coverage.”
The acquisition is the largest in Spin Master’s history, according to a presentation for its Wednesday investor call. The company also operates toy brands Tech Deck, Bakugan and Etch A Sketch, among others.
The move to acquire Melissa & Doug comes after Spin Master in August reported its second-quarter earnings, which showed revenue decreased 16.9% year over year to $420.7 million. Operating income dropped from $118.2 million last year to $34.4 million while net income decreased from $88.1 million to $28 million.
Melissa & Doug — which focuses on sustainable wooden toys — opened its first store earlier this month located in White Plains, New York. The 1,600-square-foot store marks the brand’s entrance into owned retail after being in business for about 35 years.
Editor's note: This story has been updated to clarify the status of the acquisition.
