By Gary Symons
TLL Editor in Chief
Spin Master isn’t going back to the future, but instead opted to go forward into the past, in its acquisition of US toy maker Melissa & Doug.
The celebrated toyco is known for its focus on classic toys, such as crafts, pretend play, and the wooden toys that Melissa & Doug are famed for. In a world where the metaverse, video games, and battery-driven toys of all sorts have become more prevalent, Spin Master has seen that Melissa & Doug’s focus on classic toys that encourage kids to use their own imaginations has a huge value for parents and children alike.
That value was set this week at $950 million, as the Canadian toy company Spin Master Corp. announced the completion of the Melissa & Doug acquisition, saying it has always admired the company’s mission to “ignite imagination and a sense of wonder in all children.” Spin Master has also cited the company’s dedication to sustainability, where it is a
market leader, and its work with the American Academy of Pediatrics, fostering early brain development and the health benefits of open-ended play through its Power of Play alliance.
“This acquisition brings together two formidable leaders in the toy industry, both driven by a passion to create magical play experiences for children and inspire imaginations on a global scale,” said Spin Master CEO and president Max Rangel. “By adding Melissa & Doug’s complementary product line to our existing toy portfolio we expand our capabilities in early childhood play and further bolster Spin Master’s leadership in the children’s entertainment industry.
“Our combined expertise, and the addition of Melissa & Doug’s high-quality, open-ended, creative and developmental toys, positions both Spin Master and Melissa & Doug to unlock further growth across new and existing channels and in markets globally.”
Rangel says the transaction also expands Spin Master’s reach in specialty retail and e-commerce channels, and provides a recurring, evergreen product portfolio with a diverse revenue base and significant long-term growth opportunities. As part of the closing of the transaction, the parties have agreed to eliminate the additional contingent earnout consideration of up to $150 million, previously announced on October 11th.
The acquisition is the largest in Spin Master’s history, according to a recent presentation to investors, and while it comes at a time when toy sales have slowed, the deal will result in cost synergies and a huge boost in revenues.
Melissa & Doug posted $489 million in revenue in 2022, and the parties estimate they will be able to post annual run-rate cost synergies of approximately $25M to $30M by 2026. As well, the company has been sustainably profitable with a high growth rate since it was founded in 1988, originally producing innovative wooden puzzles.