Coleco Industries, the company that helped popularize computer games in 1982 with Donkey Kong and other electronic diversions, has agreed to purchase one of the nation’s leading marketers of board games for $75 million.
Coleco--which had net income of $82.9 million in 1985 on sales of $776 million in 1985--agreed to buy Selchow & Righter, best known for the marketing of popular and classic games such as Trivial Pursuit, Scrabble and Parcheesi.
The agreement is subject to the approval of the boards of both companies. The $75-million transaction, payable in cash and notes, is expected to be completed by the end of July, officials said.
The proposed purchase further distances Coleco from faddish and expensive computer games while expanding its presence in the more lucrative toys and board game market, analysts say. Nearly 90% of the company’s sales is in toys, while less than 15% is in consumer electronics.
“The longer the (production) run with a product, the more profitable it becomes, because you don’t have to reinvent it every year,” as with computer games, one Los Angeles toy analyst said. Games such as Scrabble, first sold in 1953, have sold nearly 100 million units with very little promotion and a virtually unchanged design, the analyst said.
Last year, Coleco abandoned its failed Adam home computer system and turned greater attention to its lucrative toy business, which includes the widely successful Cabbage Patch dolls and a controversial new Rambo doll based on the movie character played by Sylvester Stallone.
In December, for example, the West Hartford, Conn., company agreed to acquire toy maker Leisure Dynamics Inc. for $21 million cash.
“It’s not a case of switching allegiances,” said Morton Handel, a Coleco executive vice president. “From our standpoint, we are simply broadening the base of our business.”
Founded in 1867, privately held Selchow & Righter is based in the Long Island community of Bay Shore and is one of the oldest companies in the toy industry.
Handel said Coleco has no plans for any layoffs at Selchow & Righter, which has about 250 employees. But he said Coleco hopes to encourage the staff to come up with new ideas for board games to supplement the current line.
Selchow & Righter officials could not be reached for comment Monday, but the company released a prepared statement in which company President Richard Selchow said: “The sale of our business to an industry leader like Coleco . . . accomplishes a major objective of Selchow & Righter’s management. . . . Our business will grow under Coleco’s ownership.”
COLECO AT A GLANCE
Coleco Industries Inc., based in West Hartford, Conn., manufactures toys and consumer electronics. Products include Cabbage Patch Kids and Rambo dolls and accessories, ColecoVision video games and software.
Millions Year Dec. 31 of dollars 1985 1984 1983 1982 1981 Revenue 776 775 596 510 78 Net 83 (79.8) (7.4) 44.9 7.7 income (loss)
Common shares outstanding: 16.6 million
12-month stock price range: $13.75--$21.50
Monday’s close: $18.50