Los Angeles Business Journal

Mattel Inc. to Acquire HIT Entertainment

By Deborah Crowe Monday, October 24, 2011

Mattel Inc. on Monday said that it signed an agreement to buy HIT Entertainment, the company behind Thomas the Tank Engine and Bob the Builder. The deal is valued at $680 million.

The El Segundo toy maker's is buying London-based HIT from a consortium led by private equity firm Apax Partners. The deal is Mattel’s biggest acquisition in about a decade.

“Mattel is the right home for Thomas & Friends,” Chief Executive Robert Eckert said in a statement, citing his company’s global marketing and distribution and HIT Entertainment’s international programming and licensing expertise.

Mattel already markets die-cast and plastic toys of Thomas & Friends characters – based on a popular British children’s TV series – under a license that has produced global sales of more than $150 million.

The deal also will help replace Mattel revenue in the pre-school segment it will lose when Hasbro Inc. takes over the license for Sesame Street products next year. Mattel had held that license for many years.

HIT has more than $180 million of revenue and the purchase price represents 9.5 times the company’s earnings before interest, tax, depreciation and amortization, according to Mattel. The acquisition, which will be financed with a combination of cash and debt, is expected to close early next year after an antitrust review.

Shares were up 63 cents, or 2.3 percent, to $28.32 in midday trading on the Nasdaq.