Mattel To Acquire MEGA Brands In $460 Mln Deal

(RTTNews) - Toy maker Mattel Inc. (MAT) announced that on Friday it agreed to acquire MEGA Brands Inc. (MB.TO) for a total enterprise value of about US$460 million, including the net debt of MEGA Brands to be assumed or repaid by Mattel.

MEGA Brands' board has unanimously approved the transaction and recommended that MEGA Brands common shareholders approve it.

The agreement provides for the acquisition of MEGA Brands for C$17.75 per common share and includes the acquisition of all of the outstanding common shares and warrants of MEGA Brands. This represented a premium of 32% to the 30-day volume-weighted average price of MEGA Brands common shares on the TSX as of February 26, 2014.

Mattel said it plans to fund the acquisition through a combination of new debt and cash on hand.

The purchase price represented net consideration of C$7.81 per 20 warrants. Warrant holders may acquire one common share of MEGA Brands in exchange for every 20 warrants at an exercise price of C$9.94 per common share. The warrants expire on March 30, 2015.

Each of Fairfax, Victor Joseph Bertrand, Marc Bertrand and Vic Bertrand, who together hold about 39% of the outstanding common shares of MEGA Brands, have entered into voting support agreements and agreed to vote their common shares in favor of the arrangement.

The arrangement agreement provides that MEGA Brands is subject to non-solicitation provisions and provides that the Board of Directors of MEGA Brands may terminate the agreement in favor of an unsolicited superior proposal, subject to payment of a termination fee of US$12 million to Mattel and subject to a right of Mattel to match the superior proposal in question.

In connection with the closing of the arrangement, MEGA Brands intends to refinance and, thereafter, redeem all of its outstanding 10% senior secured debentures due March 30, 2015, at a redemption price equal to 105% of the principal amount of the debentures, plus accrued and unpaid interest, pursuant to the terms of the debenture indenture.

Founded and based in Montreal, MEGA Brands has about 1,700 employees in 17 countries.

Mattel stated that it plans to maintain MEGA Brands' expertise in manufacturing, both in Montreal and Tennessee, and plans to maintain the MEGA Brands headquarters in Montreal and will seek to tap into MEGA Brands' skills in design and development in the construction and arts & crafts categories.

MAT closed Friday's trading at $37.31, up $0.16 on the Nasdaq. However, in after-hours trading, the stock declined $0.23 or 0.60 percent and ended at $37.08.

MB.TO closed the day's trading at C$17.72, up C$4.65 or 35.58 percent, on the Toronto Stock Exchange.