Just Play Is Close to Buying Rival Jakks Pacific
(Bloomberg) -- Troubled toymaker Jakks Pacific Inc. is nearing a sale to rival Just Play in a bid backed by private equity firm Centerbridge Partners, according to people familiar with the matter.
Closely held Just Play is in exclusive talks to buy Jakks Pacific in a deal worth 80 cents to 90 cents per share, said the people, who asked not to be identified because the matter isn’t public. A deal could be announced by the end of the month, they said.
The value of the offer is still in flux and talks could fall through, the people said.
Jakks Pacific rose 2.7% to 77 cents at 1:59 p.m. in New York trading, giving the company a market value of about $29.6 million. The company, which had about $161 million in long-term debt at June 30, had seen its shares fall about 69% in the past year before Bloomberg News reported on Sept. 5 that it had received a takeover offer from the owner of rival Jazwares Inc.
A representative for Just Play declined to comment. Representatives for Jakks Pacific and Centerbridge didn’t respond to requests for comment.
Jakks Pacific has been exploring a sale for several months, amid steep losses and a sinking share price. Like the rest of the industry, it took a big hit last year when Toys “R” Us liquidated in many parts of the world, including the U.S., where Jakks Pacific generates more than 80% of its revenue.
Jazwares owner Alleghany Corp. made an offer to buy the company for 85 cents per share, people familiar with the matter said in September. That potential deal fizzled, the people said, and Alleghany instead announced an acquisition last week of Wicked Cool Toys Holdings.
One hurdle to a sale of Jakks Pacific has been the cost of transferring its licenses for Walt Disney Co. brands such as Frozen and Marvel, according to some of the people.
Licensing agreements give companies like Disney the option to extract a fee when a license changes hands via acquisition. This essentially gives owners of valuable brands veto power over a deal. In the case of Jakks Pacific, the Disney licenses are considered to be among the most valuable parts of the company.
Just Play, however, could make for an easy landing spot because it already is a Disney partner, including licenses for Mickey Mouse Clubhouse. Just Play also knows Jakks Pacific well, with co-founder Geoffrey Greenberg having sold a previous business to the company.
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