Toymaker to expand product range

Toymaker Mattel on Monday announced plans to acquire Blighty’s Hit Entertainment for $680 million in cash from U.K. private equity firm Apax Partners.

Hit, with annual revenue of about $180 million, owns a global portfolio of preschool brands, including Thomas the Tank Engine, Barney, Bob the Builder, Fireman Sam and Angelina Ballerina.

El Segundo, Calif.-based Mattel is the company behind Barbie, Hot Wheels, American Girl and a wide array of entertainment-inspired toy lines.

Speculation about a deal between the two emerged last week.

Mattel already has a contract with Hit through 2014 to license certain plastic Thomas & Friends products, whose global sales total more than $150 million, the company said. The deal, it said, will allow it to continue to expand the products and reunite two key pieces of the Thomas toy lineup, the plastic and die-cast toys with the wood-based business.

“Hit Entertainment owns some of the most loved and trusted preschool brands in the world, and under Mattel’s leadership, I look forward to seeing them grow to even greater heights,” said Hit CEO Jeffrey Dunn.

The acquisition does not include Hit’s interest in the cable network station Sprout.

The transaction is expected to be financed with a combination of cash and debt and should close in the first quarter of 2012. It is not expected to have a material impact on Mattel’s 2012 earnings but is expected to be increasingly accretive as the benefits of owning these brands are reflected in Mattel’s results.

“Mattel is the right home for Thomas & Friends,” said Mattel CEO Robert Eckert.

Hit, created by the late British media entrepreneur Peter Orton in 1989, was bought by Apax for $890 million in 2005. In the succeeding years the children’s content business has been buffeted by declining DVD sales and uncertainties over future TV ad revenues.

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