Jakks Pacific Inc., a toymaker exploring a sale amid a steep slide in its share price, has received a takeover offer from the owner of rival Jazwares Inc., according to people familiar with the matter.
Alleghany Corp., Jazwares’ parent company, made an offer this week to buy Jakks Pacific for 85 cents a share, said the people, who asked to not be identified because the matter isn’t public. The offer values the Santa Monica-based company at about $27.7 million, based on its outstanding share count.
No decision has been made, and Alleghany could opt to not proceed with its bid, they said.
Jakks Pacific rose as high a 95 cents a share Thursday, closing at 75 cents, down 1.3%, giving the company a market value of about $24.9 million. The company, which had about $161 million in long term debt at June 30, has seen its shares fall about 69% in the past year.
Representatives for Jakks Pacific and Alleghany declined to comment.
The discussions come as toymakers look to pair up to gain scale and diversify in the wake of the industry-upending bankruptcy last year of Toys R US Inc.
Hasbro Inc., the world’s largest publicly traded toymaker, agreed last month to pay about $4 billion for Entertainment One Ltd., the maker of the children’s shows Peppa Pig and PJ Masks. MGA Entertainment Inc. made an unsolicited offer this year to buy rival Mattel Inc., which rebuffed the advance.
Jakks Pacific has licenses to produce action figures and toys for well-known companies including Walt Disney Co., which ownspopular brands such as Marvel and “Frozen” but charges some of the heftiest royalties in the industry. That, along with the collapse of Toys R Us, has weighed on profits. Jakks Pacific has been losing money since 2017.
It’s also been in play for most of this year, after shareholder Meisheng Cultural and Creative Corp. of China offered to buy 51% of its shares. In June, Jakks Pacific said it was still continuing to “explore alternative transactions,” according to a regulatory filing.
Alleghany, based in New York, is an insurance company that somewhat resembles Berkshire Hathway Inc. It uses income from its insurance policies to make acquisitions in other sectors. It acquired a stake in Jazwares in 2014 and owned 77% of the company at the end of 2018, according to its most recent annual report.
Jazwares won the license last year to produce toys for Fortnite, the popular shooting game owned by Epic Games Inc.