Mattel Surges on WSJ Report of Buyout Talks with Private Equity
2022.04.27 12:51
By Geoffrey Smith
Investing.com — Mattel (NASDAQ:MAT) stock surged in premarket trading on Wednesday after The Wall Street Journal reported that management has held talks to sell the toymaker to private equity companies.
The WSJ said Apollo Global Management (NYSE:APO) and L Catterton have both held talks with the company recently, but noted that the talks remain at an early stage.
A deal would be the latest in a string of eye-catching buyouts, although it would still be dwarfed by Elon Musk’s $43 billion bid for Twitter (NYSE:TWTR).
By 5:35 AM ET (0935 GMT), Mattel stock was up 9.1% at what would be a seven-week high.
Mattel said after its fourth-quarter earnings that it had completed a difficult turnaround after years of struggling with the relentless growth of digital entertainment products. It has also mended fences with Hollywood under CEO Ynon Kreiz, something reflected in the imminent release of a new Barbie movie starring Margot Robbie.
It grew revenue 19% last year and swung to profit in the second half. That trend is expected to be confirmed later Wednesday in the company’s first-quarter earnings, where analysts expect a 5% rise in revenue to $974 million and 3.8c a share in adjusted earnings.
Despite its improved operating performance, the stock still trades at a substantial discount to the rest of the market. Its Tuesday closing valuation of $7.8 billion reflected a multiple of only 8.5 times 2021 earnings.
