Jakks Pacific to Buy Toymax International
Jakks Pacific Inc. is continuing its buying binge, agreeing to acquire Toymax International in a $54-million cash-and-stock deal that will further expand the Malibu toy maker’s line of products to include water toys and kites.
Jakks announced the acquisition Saturday, kicking off the annual Toy Fair in New York. The company is expected to announce today a deal with Walt Disney Co. to create arts and crafts based on classic Disney characters, including Mickey Mouse among others.
Toymax’s principal stockholders, which own about 64% of the company, have agreed to sell their shares to Jakks for $4.50 a share. Jakks agreed to pay Toymax stockholders $3 a share in cash and $1.50 in value of Jakks common stock. Jakks will purchase the remaining shares in May.
The transaction values Plainview, N.Y.-based Toymax at a 48% premium over Friday’s closing price of $3.05 on Nasdaq. Toymax had sales of $132.1 million in the fiscal year ended March 31.
Jakks shares rose $1.27 on Friday to close at $18.80 on Nasdaq. They’ve risen 56% in the last year.
Jakks produces dolls based on World Wrestling Federation personalities and holds the license to make arts and craft kits inspired by Warner Bros.’ “Harry Potter” movies as well as products related to the upcoming 20th Century Fox animated movie “Ice Age.” The company also makes Remco die-cast trucks, BattleBots robotic vehicles and drawing pads, stickers and lunch boxes based on Nickelodeon program characters under Jakks’ Flying Colors brand.
The Toymax deal would be Jakks’ ninth acquisition since the company was formed in 1995, and would make Jakks the nation’s third-largest toy company, President and Chief Operating Officer Stephen Berman said Sunday. The company had 2000 sales of $252.3 million, a 37% increase over the previous year. Net income for last fiscal year was $28.6 million.
In January, Jakks bought Kidz Biz Ltd., a toy distributor based in Britain, for an undisclosed price, as the first step in a planned European expansion. In July 2000, the company acquired Pentech International, a specialty pen, marker and activity-set maker for nearly $57 million, including debt. In 1999, the company acquired Flying Colors Toys Inc. for nearly $53 million.
Toymax produces kites under its Go Fly a Kite brand, R.A.D. Robots, Mighty Mo’s vehicles, Creepy Crawlers Bug Maker and Funnoodle pool and water toys. Berman said Jakks would reduce the sales volume of Toymax products, but the company intends to keep the profitable lines, such as the kites and water accessories.
“With this acquisition, we couldn’t be more diverse,” Berman said.
Berman said Jakks’ toys typically sell well during the third and fourth quarters, as a run-up to Christmas, and its pen and stationery items are popular during the second and third quarters for back-to-school supplies. The Toymax kite and water accessories, which sell in the spring, will help round out the year.
“We’re really set up to have a nice flow of sales throughout the year,” said Berman, who co-founded the company with Jack Friedman, the company’s chairman and chief executive. “After this acquisition we will be looking aggressively at more acquisitions.”
Nearly 70% of the company’s toys and activities sell for less than $10. Jakks’ largest customers are Toys R Us Inc., Wal-Mart Stores Inc., Kmart Corp., Target Corp. and KB Toys.
Jakks Pacific expects the acquisition, its second this year, to close in the second quarter and add to 2002 earnings.
