It’s mergers and acquisitions season, and some big news just hit the toy industry fresh on the heels of Toy Fair in New York.
Toronto-based Spin Master Corp. inked a definitive agreement to acquire U.S.-based Melissa & Doug in a $950 million cash transaction. The companies have been licensing partners for a number of years via the PAW Patrol brand, and the deal will strengthen Spin Master’s business by adding Melissa & Doug’s famed line of wooden toys to its product mix.
What excites us so much about Melissa & Doug is the power of their brand, their deep knowledge in developmental play, and their passion for creativity, imagination, and sustainability. As a trusted brand of early childhood toys with an evergreen portfolio, Melissa & Doug will expand Spin Master’s presence in new categories, providing immediate revenue growth, broader reach in all retail channels, and market coverage. The addition of Melissa & Doug is highly complementary and connects with our strategic vision to reimagine everyday play, providing a compelling platform for long-term growth through innovation, while also meeting the changing demands of children and parents of the future.”
According to Spin Master, the deal provides a number of benefits beyond Melissa & Doug’s extensive assortment of open-ended, creative, and developmental toys. The company says that the acquisition provides new opportunities for innovation, expanded reach in specialty retail and e-commerce in North America and abroad, and a recurring, evergreen product portfolio in the preschool space.
“Throughout our 35-year history, Melissa & Doug has helped ignite children’s imaginations by fostering open-ended, sustainable play,” says Melissa & Doug President and CEO, Fernando Mercé. “We are confident that by working together with Spin Master, we will be able to reach more families, inspire more imaginations, and unlock greater growth potential.”
Melissa & Doug achieved $489 million in revenue last year.
Spin Master plans to finance the $950 million purchase with approximately $450 million in balance sheet cash and $500 million in debt financing. The company says that an additional contingent earnout consideration of up to $150 million is subject to achieving certain financial targets for 2024 and 2025, including gross profit performance for Melissa & Doug.
“We have an incredible history of pursuing accretive acquisitions to propel our growth as a company and have become trusted stewards of many renowned and beloved children’s brands,” says Anton Rabie, Spin Master’s Co-founder. “With this acquisition, we are committed to preserving the essence of what Melissa & Doug represents for families and are confident that our investment will enable us to accelerate growth and build upon our legacy as a leader in the children’s entertainment industry now and into the future,” adds Spin Master Co-Founder Ronnen Harary.
Rabie, Harary, and Co-Founder Ben Varadi were inducted into the Toy Industry Hall of Fame on Sept. 29 at the 2023 Toy of the Year (TOTY) Awards in New York City.
