Mattel to add Thomas and Barney in $680-million deal

Toy giant Mattel Inc. is adding pre-schooler favorite Thomas the Tank Engine, Barney and other childhood favorites to its massive toy chest in a $680-million deal, the company’s largest purchase in a decade.

Already the owner of brands including Barbie, Hot Wheels, and Fisher Price toys, Mattel announced Monday that it had agreed to buy the London firm HIT Entertainment with a combination of cash and debt from a British private equity firm.

The cornerstone of the acquisition is the rights to Thomas, a talking steam locomotive. Robert A. Eckert, chief executive of Mattel, boasted of the brands more than 60-year history as a top toy line in the U.S. and abroad.

Thomas the Tank Engine “is loved by generations of moms and kids around the globe,” he said. “Quite frankly, brands with a great track record and evergreen nature of Thomas barely come up for sale.”


HIT Entertainment owns the licensing and content rights to other popular preschool brand including Bob the Builder and Angelina Ballerina. Mattel estimated “with more than $180 million of revenues, HIT Entertainment represents one of the largest independent owners of preschool intellectual property.” The acquisition is expected to close in the first quarter of 2012.

Mattel already markets many Thomas & Friends die-cast and plastic toys under a license that extends to 2014. Global sales of the toy brings in more than $150 million. Mattel will take over the wood-based line, which is half the size of plastics and die-cast business.

“The two companies know each other well,” said Irina Hemmers of Apax Partners, the private equity company that sold HIT. “There is considerable industrial logic in this combination.” London-based Apax has $40 billion invested in companies worldwide, Mattel said in a statement.

Thomas the Tank Engine got his start in the pages of a children’s book. Rev. Wilbert Awdry, a lifelong railroad enthusiast and Anglican clergyman, created “The Railway Series” in 1943 to entertain his son Christopher who was bed stricken with measles. It was about an engine named Edward.

Three years later, Thomas the Tank Engine, a blue cheeky train with the number 1 painted on the side, was introduced in the series. Talking train cars, locomotives and the occasional human worked the railways on the fictional island of Sodor. Each story has a moral lesson, and Awdry would often recounted real-life train events through the characters.

In 1984, the popular children’s book was turned into a television show in Britain. A year later, Beatles drummer Ringo Starr jumped on as the voice of the narrator. Since, Thomas the Tank Engine has grown into a global brand that includes figures, movies, and live events.

Another big name in the pre-schooler learning world that was acquired in the deal is Barney, the purple stuffed dinosaur famous for his “I Love You” song. Barney & Friends has aired in more than 220 territories since it first hit airwaves in 1987, and has a mass appeal for toddlers to school age children.

The deal will help Mattel expand the preschool sector after the loss of the Sesame Street license to rival Hasbro earlier this year, analysts said. The purchase is expected to expand Mattel’s appeal to boys, said Margaret Whitfield, a toy analyst Sterne Agee. “Hot Wheels is a key brand for Mattel,” and Thomas will be another, she said. It’s not just another car; it’s a personality, and this what makes it such a great toy for young boys.”