Osler and McCarthys advising on Mattel’s acquisition of Mega Brands

REUTERS/Peter Jones/Files

REUTERS/Peter Jones/Files

The world’s number one toymaker, Mattel, is set to acquire Canadian Mega Brands in a foreign inbound deal worth $460 million that Mattel says will help it compete with Lego.

The deal comes on the heels of a slow global toy market in 2013, with overall toy sales falling.

Despite reports on the struggling market, some deal activity still emerged which aimed at absorbing a share of a relatively healthy toy-building market. On August 13, 2013, Canadian Spin Master acquired the 112-year old construction toy brand Meccano.

Reuters reported that sales of building toys like Lego’s have been seeing growth where action figures and preschool toys – Mattel’s primary strength – have been slowing. Dabbling in the toy-building market was, thus, a matter of economic contingency – especially now that Lego overtook Hasbro as the world’s number two toy company. Mattel has less than 1 per cent of the building blocks market before the deal.

Mega Brands competes directly with Lego and is said to have roughly 10 per cent of the market share of construction blocks sold under its MEGA Bloks brand.

Mega Brands is based in Montreal.

Fairfax Financial Holdings is Mega Brands’ largest shareholder, with 19 per cent stake. Investors, together with Fairfax and CEO Marc Bertrand, agreed to the deal that values each share of Mega Brands at $17.75.

Helping piece this deal together are Osler, Hoskin & Harcourt LLP and McCarthy Tétrault LLP.

Osler represents Mega Brands with a team including Shahir Guindi, Christopher Main, Chima Ubani and Mikulas Arendas (corporate); Etienne Massicotte (financial services), Mark Brender, Antoine Stébenne, Alain Fournier and Marc Richardson-Arnould (tax); Peter Franklyn (competition), Sven Poysa, Julien Ranger and Sandra Cohen (labour law and pension and benefits [Canada and US]); Donna White (intellectual property) and Dan Kirby (environment).

McCarthys represents Mattel with a team including David Woollcombe (M&A/capital markets), Max Rogan (capital markets), Krista Lawson (M&A), Francois Giroux (litigation), Gabrielle Richards and Elaine Buzzell (tax); Rachel Solyom and Nathalie Gagnon (employment and labour); Oliver Borgers (competition), Véronique Wattiez Larose (M&A), Simon Potter (litigation), Deandra Schubert (capital markets), Martin Boodman (litigation), Mathieu Dubord (capital markets), Marjolaine Hémond Hotte (corporate finance), John Boscariol (international trade/WTO and public procurement), Cindy Vaillancourt and Dominique Amyot-Bilodeau (environmental); Charles Morgan (informational technology), Jonathan Bitran (competition) and Jean Charest (corporate governance and M&A).

Latham & Watkins LLP is representing Mattel with a team including Jim Beaubien, Jordan Miller, Caitlin Gibson and Mike Montgomery (corporate); David Taub, Alice Chung and Julie Crisp (employee benefits and compensation); Joseph Farrell (employment); Matthew Walch, Julie Dalke and Aryeh Richmond (intellectual property); Nicholas DeNovio and Tali Weiss (tax); Michael Feeley and Aron Potash (environment); and Kim Boras and Christeen Walch (real estate).

In 2006, a subsidiary of Mattel merged with Hong Kong-based Radica Games to help the company better participate in the electronic toys arena.

Mattel’s largest deal was its acquisition of HIT Entertainment, a London-based provider of television programming, worth $680 million in 2012.

-Ahmad Hathout

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