Toy Makers Win Rights to ‘Star Wars’

Hasbro Inc. and Galoob Toys Inc. on Tuesday won the rights to produce toys for the three new “Star Wars” movies in a deal that analysts call the biggest toy licensing agreement ever.

While both companies declined to disclose terms of the agreements, “Star Wars” is already the best-selling toy license to date, with millions of dollars in revenue each year. Galoob, meantime, offered almost one-fifth of its stock to the films’ producers at an attractive price.

“ ‘Star Wars’ is the biggest success story in the toy industry,” said Frank Reysen, editor of Playthings magazine, a New York-based trade publication. “Since the original movie came out 20 years ago, there’s hardly been any let up in demand for ‘Star Wars’ toys.”

Hasbro, the No. 2 U.S. toy maker, and No. 3 Galoob already hold the licenses for the original “Star Wars” trilogy. Each produces a wide range of merchandise that not only attracts children but also fanatical adult collectors.

Although those agreements will still hold, both companies also gain rights to the much-awaited “prequels” from Lucasfilm Ltd., which will track the early life of villain Darth Vader.

Mattel Inc., the largest U.S. toy maker, reportedly was interested in the contract, but was left out by Lucasfilm.

Pawtucket, R.I.-based Hasbro will produce core action figures, vehicles and games.

In addition, Hasbro will also venture into some new “Star Wars” categories, including electronic hand-held games and creative play products.

“Believe me, this is a major coup for us,” said Alan G. Hassenfeld, Hasbro chairman and chief executive. “It is truly the crown jewels for the toy industry.”

In addition to “Star Wars” toys, Hasbro’s lineup includes Mr. Potato Head, Tinkertoy, G.I. Joe and Monopoly. Galoob makes Micro Machines and Sky Dancer.

Galoob, based in South San Francisco, Calif., was awarded the rights to small-scale figures, vehicles, play sets and accessories. In addition, Galoob has offered just under 20% of its common stock to Lucasfilm for $15 per share.

Even before the licensing announcement, which came after the close of trading, Galoob stock had shot up 12.5%, or $1.94, to close at $17.50 a share on the New York Stock Exchange.

Hasbro was down 13 cents to close at $26.69 a share on the American Stock Exchange.

Both companies also said that they had won long-term preferential negotiating rights from Lucasfilm for the same categories of toys based on new Lucasfilm movies.

The first of the new “Star Wars” movies, “Episode I,” is expected to be released in May 1999. The remaining films will be released in the next decade.

This year, Lucasfilm re-released the original “Star Wars” films to much fanfare.