MCA Agrees to Sell Ailing Toy Unit

Entertainment giant MCA Inc. has agreed to sell its troubled LJN Toys unit to Acclaim Entertainment Inc. for an undisclosed amount of cash and Acclaim common stock.

Acclaim, a major publisher of software for the popular Nintendo Entertainment System, will acquire all of LJN’s U.S. operations, with the exception of its American Publishing puzzles division. The accord also gives Acclaim the right to release five additional titles per year for the Nintendo Entertainment System under the LJN label.

The acquisition remains subject to various government regulatory and legal approvals, the companies said.

Acclaim, based in Oyster Bay, N.Y., was the first U.S. company to obtain a license from Nintendo of America to publish software for the Japanese computer game maker. It had sales of nearly $70 million last year, an increase of 76% over 1988.

MCA has been plagued by the performance of its LJN unit since consumer disenchantment with a faulty LJN toy gun caused MCA profits to plunge 79.5% to $8.1 million in the second quarter of 1987. Net income was hurt, in part, by a $35-million charge that MCA took to write down the value of LJN’s inventory of paint-shooting “Gotcha!” toy guns.