By Gary Symons
TLL Editor in Chief
Spin Master has agreed to acquire Melissa & Doug in a move designed to bolster its presence in early childhood play.
The Canadian toy and production company has grown to become one of the largest toy companies in the world, and this week offered $950 million to buy out US-based Melissa & Doug. Spin Master says the acquisition of a well-recognized and trusted brand in early childhood play will help cement Spin Master’s position as a leader in the children’s entertainment industry and will bring complementary capabilities in early childhood toys.
Melissa & Doug are particularly well known for their open-ended, creative, and developmental wooden toys.
Max Rangel, Spin Master’s Global President and CEO, says Melissa & Doug has developed into a beloved brand of high-quality, sustainable, and learning-enriched play that is sought after and trusted by parents and children alike.
“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,” said Rangel. “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.”
Melissa & Doug President and CEO, Fernando Mercé says that for his company, the new partnership with Spin Master is an opportunity for faster growth in a global market.
“Throughout our 35-year history, Melissa & Doug has helped ignite children’s imaginations by fostering open-ended, sustainable play,” said 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.”
Spin Master’s team also says Melissa & Doug bring some unique benefits to the company, particularly as parents are looking for educational toys that cut down on screen time for their kids. Melissa & Doug also boasts a recurring, evergreen product portfolio with a strong and diverse revenue base, earning $489 million in 2022. The deal also expands Spin Master’s reach in a number of specialty and ecommerce channels, with the potential for growth in mass retail and international expansion.
“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,” said 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,” added Ronnen Harary, Spin Master’s Co-founder.
One major question was how Melissa & Doug would operate after the acquisition, but Rangel clarified that in an emailed response to reporters’ questions in a news conference on Oct. 11.
“We are committed to preserving the essence of what Melissa & Doug represents for families and continuing to operate it as a stand-alone company while working together to inspire more children through the magic of play,” Rangel said.
The markets also approved of the deal as Spin Master shares rose in the first subsequent day of trading, and analysts applauded a deal that will immediately improve the company’s bottom line.
National Bank of Canada analyst Adam Shine said in his note the acquisition is expected to be immediately accretive to Spin Master’s earnings per share in 2024.
“It’s a highly recommended brand with strong consumer loyalty and has achieved sustained (point of sale) performance ahead of the overall toy market over the past five years,” he said in a note to clients.