Icahn takes a small stake in Mattel
Billionaire activist investor Carl Icahn has taken a stake in toy giant Mattel Inc., which announced Monday that its board had approved buying back more stock and increasing its annual dividend.
The $500-million buyback is part of the El Segundo company’s ongoing share repurchase program, announced in February 2003, under which Mattel has paid about $2.3 billion for about 117 million shares of common stock.
Additionally, the company announced that its board had raised the company’s annual dividend for 2010 by 11%, to 83 cents per share from 75 cents in 2009. The company also said it would switch from paying dividends to stockholders once a year to a quarterly basis starting next year.
Mattel stock increased 3.3%, or 78 cents, to $24.33 on Tuesday.
Robert A. Eckert, Mattel’s chairman and chief executive, said the moves demonstrated the board’s “commitment to returning excess funds to stockholders.”
An aggressive financial trader who has a history of shaking up companies, Icahn has recently been trying to seize control of Lions Gate Entertainment Corp., a Santa Monica movie studio. He had accumulated 2.4 million shares of Mattel as of Sept. 30, according to regulatory filings.
Sean McGowan, a toy analyst at Needham & Co., said it was still too early to know Icahn’s intentions in taking a stake in Mattel. He noted that the investor’s holdings amounted to less than 1%.
“The position he’s announced is tiny and not indicative of being able to flex some muscle,” McGowan said. “But it could just be the beginning, and it could lead to something bigger.”
Mattel, the world’s largest toy maker, last month reported strong third-quarter profit but saw disappointing sales results for some of its core brands.
For the quarter that ended Sept. 30, sales were $1.83 billion, up 2% from $1.79 billion in the year-earlier period. Profit totaled $283.3 million, or 77 cents a share, up 23% from $229.8 million, or 63 cents, a year earlier.
