Kenner Parker : Second Hostile Bid Launched for Toy Firm

New World Entertainment on Thursday launched a hostile $41-a-share bid for Kenner Parker Toys Inc., which rejected the Los Angeles movie production company’s initial offer just two weeks ago.

Kenner, the nation’s third-largest toy maker, responded with two lawsuits against New World intended to block the tender offer. Kenner said previously that it believes its shareholders are better off if the toy company remains independent.

Kenner’s shares rose $3.75 in trading Thursday on the New York Stock Exchange, closing at $45.625.

Toy industry analysts said Kenner’s management was likely to take the company private to avoid a takeover, if legal challenges fail. “I think this is the end of Kenner Parker as a public company,” said Barry Rothberg, an analyst with Mabon, Nugent & Co., a New York investment firm.

Analysts said it is unlikely New World would be outbid. No other suitor has stepped forward since New World disclosed a friendly $41-a-share offer on July 17. “The price is just too rich,” said Rothberg.

Analysts said that much-smaller New World had nothing to lose by pursuing Kenner. If Kenner went private, New World would earn a tidy profit on its 8.4% Kenner stake, acquired at an average share price of $31.50.

Owns Monopoly, Play-Doh

Kenner Parker, based in Beverly, Mass., was a division of General Mills until spun off in late 1985. Kenner Parker toys and games include Care Bears, Play-Doh, Monopoly and Clue.

New World owns Marvel Comics and has produced a string of low-budget movies such as “Reform School Girls.” It also produces television shows, including “Crime Story,” and cartoon features, including G.I. Joe and Transformers, both based on toys made by Hasbro.

New World said previously that a merger with Kenner would give it plenty of new material for cartoon shows based on Kenner toys and games. New World would also get access to the toy market for its 900 Marvel comic book characters, such as Spiderman and Incredible Hulk.

In a statement Thursday, Harry Evans Sloan, co-chairman of New World, said: “We continue to feel strongly that the combination of Marvel and Kenner Parker would create a company far stronger than either company on its own.”

Kenner Chief Financial Officer G. Neal Ryland didn’t respond to a request for comment. New World officials were unavailable Thursday.

New World didn’t say how it would finance the deal, but said its investment adviser, Drexel Burnham Lambert, is “highly confident” that it can raise the financing “under certain conditions,” which weren’t specified.

Wants Poison Pill Validated

In a lawsuit filed Thursday in Massachusetts Superior Court, Kenner claimed that New World violated a state law that would require the company to wait two years before launching a hostile bid. Kenner said it is also seeking a ruling from the Delaware Chancery Court on the validity of its existing “shareholder rights” anti-takeover measure. Also known as a “poison pill,” the defensive measure makes Kenner more expensive by increasing the number of common shares.

Meanwhile, New World said Thursday it is suing Kenner’s directors in Delaware Chancery Court for allegedly breaching their responsibility to shareholders by refusing to discuss the offer with New World.