Mattel to buy Mega Brands for $460 million

If I pay money for a pile of trash, does that mean it is no longer trash? I think it will have little effect on Lego unless Mattel seriously revamps the quality of MB.

$460 million is quite cheap, compared to the millions billions LEGO is worth. It might improve their quality, I suppose...

It only coasts lego more to overtake mattel ;)

If quality can eventually be matched, then stronger competition will only mean good things for consumers.

Only problem IMO would be licensing of certain themes, other than that ..... Who cares

The licensing thing is a little worrying. Seems like Mattel would have a lot more leverage than MB did. Mattel makes DC action figures for example, I hope that doesn't give them enough sway over DC to steal Batman and friends away from LEGO.

I thought TLG was the world's No. 1 toymaker...

if you haver ever put together any barbie buildings, you know they wont improve the quality of mb.

I think Mattel will have a hard time bringing Mega up to their quality level. It'll be interesting to see if they slap the Mattel logo on MB stuff, or leave it off for now.

It seems like the move is a way to increase sales. Toy sales around the world are down, except for the construction sector. LEGO has lifted the entire construction toy sector up, including MB, and Mattel wants to add that increase to their own portfolio. It's a good buy for them, since MB is way off its high from a few years ago. If there's any value left at the company, Mattel may be able to exploit it in a way MB was unable to on their own.

If the construction boom ends and sales begin to falter (say some shiny new do-it-all product from Apple appears to eat into parents' toy money) Mattel will just spin MB back off again.

Lego has worked and gained customer loyalty for years, of course there will be an impact in sales and market share, and maybe some changes in licensed products. However, Lego's expertise, quality and customer loyalty will make them succeed, they've gone through tougher times in the past and they continue to be the best toy company in the world.

I think LEGO has a significant advantage in that it not only develops toys for children, but also develops products for adults too (and this is also true of the film in that it has lots in there for adults as well). I don't think MB has the same grown-up appeal as LEGO, and as it's adults that generally buy the sets, LEGO has an advantage.

Why is Mattel buying MB? There's definitely a good synergy there and perhaps MB were seen as an easy and cheap purchase, so there could be some financial shenanigans going on too.

The only problem for LEGO then, as others have said, are the licensed sets. LEGO could lose these and still be very profitable, but then again, could MB make more profit from the license than LEGO have been making? It would be quite a gamble to try.

They already have Barbie Megablocks, heh.
I wonder in which direction they will push it!

Being Canadian myself, I would normally be disappointed in losing a large company to a US based interest. However, due to the poor quality and limited construction opportunities, MegaBloks was one product I couldn't support, nationality or no. Either Mattel did not do their research on the product quality, or they have a solid plan to upgrade its quality, which, if they wish to compete with LEGO will be an expensive proposition indeed. It's likely that Mattel made the purchase primarily for the licenses.

DAMN, Lego should buy Mattel now :)

Interesting. In my experience, Mega Bloks have actually improved somewhat in quality, while Mattel products are some of the most poorly made and inconsistent toys I have handled.
Aside from licensing, I don't see any threat here.

This is an interesting development for sure. I wonder not only about how it might affect LEGO, but also how it might affect the LEGO Group's other competitors. The LEGO Group already unseated Hasbro as the second-largest toy company in the world. Now Hasbro's Kre-O might face even stiffer competition as Mattel gains the potential to divert resources from their less popular brands into the Mega Bloks brand.

Also, Mega Bloks is by far the most prominent "clone brand" here in North America, but I don't know a lot about its overseas status. Mattel might put money into promoting Mega Bloks on a global scale, and that could be problematic for European and Asian clone brands that have previously had a reasonably secure niche as the "budget alternative" to LEGO.

Under Mattel's control, there might be changes in what licenses Mega Brands pursues and in its capacity to acquire them. Mega Bloks has done a lot of licensing from video game brands, including M-rated games that the LEGO Group won't touch. Obviously Mattel can now bring more of their own in-house brands to the table, like the Barbie line previously or like so many of Hasbro's Kre-O themes. Mattel also has enough clout to possibly give more weight to licensing negotiations with major media entities like Nickelodeon.

It'll be interesting to watch for sure. I don't think it's going to be a huge game-changer for the LEGO Group, which is sturdily rooted in the global building toys industry, but it could shake up the other competition, and that might result in a different playing field later on down the line.

I think you folks are missing a key point. Mattel didn't buy MB to compete with Lego, they bought MB to compete with Hasbro and their Kre-O brand.

There goes my hope for a LEGO He-Man theme. Oh well.

I think Mattel liked what MB did with their Barbie products. I have no idea if they were successful or not, but based on this transaction I would guess that they were. Mattel has several other properties that could be made in MB, such as Hot Wheels, Matchbox, Monster High, Polly Pocket. They also have a WWE license...I could see them making sets with that.

Well, we won't see any impact for at least three, more likely, five years. This is a debt-equity purchase of a company that's itself in debt... yeah, I'm an anorak... not a cash offer with more cash to come. There's little left over for investment without incurring even more debt, so it'll get treated like some sort of financial equivalent of Jenga or Ker-plunk... gently try and maintain existing revenue streams without everything collapsing, and hope shareholders don't panic and knock the whole thing onto the floor :o)

Mattel and Hasbro have both looked at the only growth segment in toys... the construction brick sector... and said to themselves "I want some of that action". And we all know what happened when they both tried entering the computer games sector back in the 80s and 90s with similar aims.

You know what's coming next...Disney buying Lego. Make it happen!

^ http://www.youtube.com/watch?v=9o19CaOSuD8

I don't see it impacting the lego group much, might get interesting between them and Hasbro. Personally I'd love to see some Heman/ She-ra mini figures, they'd go well with my Transformer Kreons.

I do like mega bloks, and a monster high theme is likely. And also like kreo. and knex.
there may also be a hot wheels mega bloks video game.

Like some people have said, I hope Batman does not dissapear from Lego Themes.

Mattel will provide severe competition for licensed themes. However they can't really improve on MB without making them incompatible with previous MB products.
I think this would alienate all those who currently collect MB. Although ultimately it could provide competition to Lego?
As for Kreo ? It is made by Oxford in part or in total and is no competition for Lego.

Character Building (COBI) and Click Bricks (Star) are closer to Lego in quality and feel than Kreo.
If those brands get the right license deals they could provide the "cheap" clone option for parents.
COBI have probably not done as well as they might, because they tried to be compatible with both MB and Lego, when they should just have tried to match Lego.

^ Click Brick are no longer using Star, and even Star themselves are starting to cut corners judging from the sets I just bought. Oxford aren't as good as they used to be before Hasbro bought them, and Cobi have also dropped a bit in quality now they're no longer manufacturing everything in Poland. Cobi do have a lot of good unique parts though, especially brackets and other SNOT pieces.

The problem I've always had with MB is the texture/feel of the plastic they use. If Mattel can fix that then I'd give them another look. But if becoming part of a bigger company raises the prices, as it did with Oxford/KreO, then there will be no reason not to just stick with LEGO.

Test - when I hit "post comment" after spending 15 minutes writing, it just wiped the text from the text entry box.

Okay, don't have time to repeat it all, but 1) I think MB actually skews older with its licenses (Halo, CoD), comparable to TLG's Disney live action licesnses like LOTR, POTC at least. Younger licenses like Skylanders seem to have flopped. They do not compete with LEGO in the more kiddie-oriented City/Space/Adventure range. 2) In my experience the declining quality of LEGO and improving quality of MB make the difference negligible to the average buyer; on the other hand MB are certainly no cheaper, so you'd expect that. 3) Big-name licenses with huge fanbases like Star Trek and Dr Who do not seem to have boosted other clone brands much, but maybe Mattel's makreting muscle would change that. 4) MB should try to wrest the Nintendo license from KNEX, there is obviously massive pent up demand for Zelda building sets.

I assume the response from Lego will be a desire to maintain revenue streams, which in recent years seems to mean licensed sets. So look forward to Lord of the Rings wave 3, 4, 5, and onwards, and other licenses that I can't imagine right now.

Because who needs originality when you have profitability, right?

Heck you could buy a single minifig packet and get more quality than all of the Mega Corporation combined! :) I'm not expecting huge wiplash for Lego. They've beat Mega in the past and they will continue to do so.

Lego quality is declining in my opinion. Maybe this move gets Lego to regain the quality they were known for. Cheaping out will not buy my loyalty.

TLG seems to be a lot more geared toward minfigure detail and elaborately molded pieces than usual. Which IMO is fine...as long as that stays confined to licensed themes (like the new SW battle packs). Their usual high-quality sets can still be found in the likes of Modular Buildings, etc.

Intereseting to know this, in the future many of Mattel's series can possibly be part of the MegaBloks line like Barbie and Hotwheels did.
And generally Mattel has a big strength of brand notability and licenses. Obtaining MegaBloks can possibly make their line more competitive. Hope this can make TLC more cautious.

MegaB had tried but failed to topple Lego all this time and it's not gonna do so anytime under Mattel. Plus Lego's reputation has skyrocketed in the same time and now they're number 2. Plus they have a extremely strong fan base.

They will IMO, upset the balance if they step up their quality. Their plastic is totally ****. Too bad coz they really have some mean Halo sets.

Hopefully things don't get messed up too badly with the products up there...

Having collected Lego since 1980, if Lego folded today I would still have more than enough to keep me busy for the rest of my life.

What a twist!

no he man now :(

Just read the article, interesting stuff there. It says many things about how it won't be easy to make a lot of profit this year, after buying out the company. Seems like they want the readers to soften up, eh? Any-who, I wouldn't think this would affect Lego so much, in the Construction Toy Industry Lego always tops off with the better plastic and products. This is probably due to the licensing themes, and I fear Mattel will want to get as many licenses to make a good increase in profit this year, and to try and get at the top of the Construction Toy Industry, which won't be easy.

Lego is a cash rich privately owned global behemoth. The only real threat that a MB Mattel pairing has is an ability to command shelf space. And there is a fairly easy solution to that for Lego. Buy Hasbro. In one swoop they completely reverse the dynamics, and they are playing in Mattels backyard. And doing so from the number 1 position.

Mattel might be too late to try and challenge Lego on some of the hard core licenses. Remember DC is owned by WB. And WB just made far more in partnership with Lego on the Lego Movie than they ever see from a few DC action figures. Marvel is in a similar position. Lego has done well with Disney, and the MB marvel stuff was a bust. Plus Disney knows the annual sales with Lego from SW, and no way would they walk away from that in favor of Mattel and MB. (I think Lego SW has done better than Hasbro in recent years.)

Really the only leverage Mattel might have with existing licenses is maybe Disney Princesses. But even then it's a balancing act for the licensor. Yeah Mattel has a strong hand with the overall Princess license, but I think Lego may still be stronger with overall Disney relations right now.

Oh one other interesting side effect of this. If Mattel buys Mega, it should mean that prices of Lego in Canada will go down to more in line with US pricing. Lego in Canada is subjected to a fairly high tarrif because it is directly competing with a Canadian Domestic manufacturer (Megabloks). If Mega is no longer Canadian, than there is no longer domestic competition, hence no more tariff. (They can't tax one foreign business and not the other.)

I am certainly no expert in these matters, but I despise this deal. As a parent who saw F-P toys go from wonderful to electronic trash, with manufacturing going from the USA to China, I don't like the deal at all. I'm not a fan of MB, but it was nice to see "Made in Canada" on the boxes. What now?

I think lego will be fine but if you are hearing me the latest minifigures from 2013 and 2012 sets I own have really bad loose arms and legs I think you can improve lego

I think it would have been great if the article text after the headline was "HA HAHA HAHA HAHAHA HA HAAAA HAA!" for 5 lines or so.

I actually have been saying for a while, to concur with @jospehliyen, that I think a Disney attempt to acquire TLG is completely within the realm of possibility. There are only a few WB licensed themes comparatively to an overwhelming amount of Disney. And a few Fox. But personally I want more Disney themes. Especially the MUPPETS! I'm looking at you Lego.

TLC is financially, organisationally and brandwise stronger than ever and better than ever. It got a wellfunctioning leadership and no stockmarketowners to dictate, manipulated or sell them. On top of this they tapped into the media/movie/game business with excellence.

In the forseen future they are pretty untouchable.

i thought I read somewhere Lego has most recently taken over Mattel as the biggest toy brand in the world?

The Starwars franchise is now under the Disney umbrella so Lego definitely has to keep making Disney happy. Besides, Lego has a much wider global reach among kids and grown-ups. It's not like Lego is gonna stay put and do nothing. Lego has been re-inventing itself in recent years, so let's see what comes out next! ^^