Tonka Makes Friendly Bid to Acquire Kenner Parker
Kenner Parker Toys accepted a $622-million friendly buyout offer on Friday from Tonka, the maker of Pound Puppies and toy trucks, and seemed to wriggle free of the takeover web cast by the owners of Spiderman--New World Entertainment of Los Angeles.
Since mid-July, Kenner Parker has been seeking ways to evade the persistent advances of New World, a television and movie producer and comic book publisher seeking to buy a toy maker that could make toys to go with its 900 cartoon characters.
Friday’s announcement means that Kenner Parker found a competitor willing to bid against cash-rich New World. Tonka’s offer of $51 a share on Friday exceeds New World’s offer last month of $47 and continues the quick rise in the Kenner Parker stock. In the last year, the stock has traded as low as $18 a share.
Kenner Parker officials also seem to have little to fear from Tonka. “There’s an arrangement with Kenner Parker management to continue with the company,” Tonka President and Chief Executive Stephen Shank said in an interview.
Tonka’s offer is likely to succeed, said Robin Young, director of research for John G. Kinnard, a Minneapolis brokerage.
Any further bid from New World or another suitor probably would have to reach an exorbitant $55 to $56 a share, he said. “I don’t see anyone stepping up to do that. . . . I’m a little surprised the offer came in where it did.”
New World’s $47 a share offer has not been withdrawn, said company spokesman Jim Zemelman, who declined to comment further. If Tonka prevails at $51 a share, New World still would profit handsomely on its 907,000-share stake in Kenner Parker, accumulated from early May to July 16 for well under $40 a share.
The $51 a share bid by Tonka, to be made to stockholders next week, is an all-cash offer for all outstanding Kenner Parker stock and other securities. In all, Kenner Parker has 10.8 million shares of common stock outstanding plus stock options and bonds convertible to 1.4 million additional shares. That would put the offer’s total value at $622 million.
Kenner Parker shares closed up $1 at $50.875 after the announcement. New World shares fell 37.5 cents to $9.25. Shares of Tonka dropped $1.25 to $20.
Analysts said that a union of Tonka and Kenner Parker, which makes such board games as Risk and Monopoly and such toys as Nerf balls and Play-Doh, would boast a wide range of perennial favorites, and form a well-balanced rival to toy industry leaders Hasbro and Mattel.
The deal is unlikely to affect the level of competition or consumer prices in the cut-throat toy industry, the analysts said.
Tonka, based in Minnetonka, Minn., had 1986 earnings of $22.3 million on sales of $293 million, thanks in large part to bounding sales of its Pound Puppies. But slower sales of the small child-sized furry toys in the six months to July 4, pushed sales down 21.9% and earnings down 69% from the same period in 1986. In its 1986 annual report, Tonka worried about an over-dependence on such fads as Pound Puppies in 1986 and GoBots in 1985.
