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Mattel, in Tech Play, to Buy Electronic Line

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Times Staff Writer

In its first major acquisition since the late 1990s, Mattel Inc. has agreed to acquire a toy company best known for making electronic playthings that appeal to older children.

Radica Games Ltd., a maker of games and other products such as 20Q, Play TV and Girl Tech products, agreed Tuesday to Mattel’s offer of about $230 million, or $11.55 a share, the companies said. That’s a premium of $1.24 a share over Radica’s closing price Tuesday. The deal is expected to be announced today.

The acquisition -- the first since Mattel Chief Executive Robert Eckert joined the company in 2000 -- marks the company’s biggest commitment in years to broadening its product line to include toys for the elusive 8- to 12-year-old market.

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“For Mattel, acquiring Radica is the right thing, at the right time, at the right price,” Eckert said in an interview late Tuesday. “They’re in a growth area, particularly within electronic games, and it’s an area in which Mattel has very little presence and we want to do more.”

Mattel’s biggest competitor, Hasbro Inc., and others have been building up their tech-toy offerings as increasing numbers of children and their parents’ dollars have drifted toward electronic games and other high-tech playthings.

El Segundo-based Mattel, however, burned by a disastrous 1999 acquisition of software maker Learning Co., mostly stayed on the sidelines, offering only a few tech products.

That’s why today’s news is not a huge surprise, a toy industry veteran said.

“It makes absolute sense -- it was either build up this category and do it on their own or make an acquisition,” said Jim Silver, editor of Toy Wishes magazine. “Mattel needs to play in the electronics area. That’s the one area that other companies are in and they really aren’t.

Radica, which had sales last year of $163 million, said in April that it was looking for a buyer. It had been frustrated, CEO Patrick Feely said, by what it saw as the market’s failure to properly value the company’s strong sales and innovation.

“With Mattel and Radica, you have two companies that are really well suited to each other,” Feely said.

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Mattel can give Radica’s operation more powerful financial, manufacturing and other back-end support as well as international distribution.

Founded in 1994, Radica, which has headquarters in Hong Kong and offices in Dallas, first made a name for itself with the hit toy Bass Fishing, a mini rod and reel electronic game that simulated casting and reeling in fish. The company then branched into adult hand-held games, including poker and other gambling-themed toys.

More recently, Radica drew attention with girl-themed electronics. That’s been a particularly difficult niche in recent years because many preteen girls who have grown out of traditional toys have been turned off by boy-centric video games focused on shooting, racing and fighting.

Radica’s answer included My Photo Booth, a $60 mini booth with which girls can take and print photo strips similar to arcade-style pictures.

For this year’s holiday season, Radica is partnering with Sega Corp.’s toy division to introduce Digi Makeover, a camera and television plug-in that enables girls to take pictures of themselves and then use the TV to try out hair and makeup styles on their virtual selves.

Radica’s gender-neutral games also earned acclaim. In February, the company’s 20Q game, an electronic version of 20 questions, was named electronic entertainment toy of 2005 by the Toy Industry Assn.

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Mattel said it had not made any decisions about relocating or reassigning Radica’s 75 employees in Dallas and 5,900 employees in offices and factories in Asia. The deal is subject to regulatory and shareholder approval.

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