Jakks Play

At Toy Fair Dallas last week, one of the most frequent topics of conversation was collaboration and consolidation: essentially, mergers and acquisitions.

After a rumor that Jazwares would purchase Jakks Pacific — a deal that never went through — via Alleghany Capital Corp., the company has acquired Wicked Cool Toys. The deal left Jakks to sit a bit longer, though the company did acknowledge just days later that “another party” was expressing interest following a recapitalization transaction.

“As I have said, the recapitalization transaction allowed us to continue to pursue our business objectives with renewed vigor and resolve,” said Stephen Berman, CEO and co-founder of Jakks Pacific in a statement issued on Sept. 6. “We remain committed to executing our business plan in the months and years ahead. At the same time, however, the company is exploring the alternative transactions described in this announcement.”

Those “alternative transactions” are potential buyout offers.

The latest report is that Just Play is nearing a deal to purchase Jakks Pacific for 80-90 cents per share, with sources close to the deal telling Bloomberg that the situation remains fluid and that a final deal could still fail to materialize, though it seems to be close. Another source confirms the report with the Toy Book, noting that an investment firm is prepared to back the transaction, but it is not a done deal yet.

One of the biggest challenges in completing a sale for Jakks Pacific is said to be its licensing arrangements with partners such as Disney, among others. Beyond Jakks’ core toy businesses, the company operates Halloween costume maker Disguise Inc. as a separate division — one that also holds a multitude of licenses. In the event of a sale, licensors can often charge a fee for the transfer of a license. Despite challenges within Jakks, Disguise has been noted as a strong point for the company.

Jakks has been deemed a potential target for a takeover dating back several years to when the team that became Basic Fun! made a play for the company, at the time giving it a valuation nearing $20 per share.

As we move ahead through the fourth quarter and look toward Toy Fair New York, more toy industry consolidation seems likely.

About the author

James Zahn

James Zahn

James Zahn, AKA The Rock Father, is Editor-in-Chief of The Toy Book, a Senior Editor at The Toy Insider and The Pop Insider, and Editor of The Toy Report, The Toy Book‘s weekly industry newsletter. As a pop culture and toy industry expert, Zahn has appeared as a panelist and guest at events including Comic-Con International: San Diego (SDCC) Wizard World Chicago, and the ASTRA Marketplace & Academy. Zahn has more than 30 years of experience in the entertainment, retail, and publishing industries, and is frequently called upon to offer expert commentary for publications such as Forbes, Marketwatch, the Wall Street Journal, the New York Times, USA Today, Reuters, the Washington Post, and more. James has appeared on History Channel’s Modern Marvels, was interviewed by Larry King and Anderson Cooper, and has been seen on Yahoo! Finance, CNN, CNBC, FOX Business, NBC, ABC, CBS, WGN, The CW, and more. Zahn joined the Adventure Media & Events family in 2016, initially serving as a member of the Parent Advisory Board after penning articles for the Netflix Stream Team, Fandango Family, PBS KIDS, Sprout Parents (now Universal Kids), PopSugar, and Chicago Parent. He eventually joined the company full time as a Senior Editor and moved up the ranks to Deputy Editor and Editor-in-Chief.