Wells Fargo: Now's The Time For A Hasbro-Mattel Merger

After discussions of a potential Mattel, Inc. MAT and Hasbro, Inc. HAS tie-up were first reported in the Wall Street Journal earlier this month, Wells Fargo is throwing their hat in the "for" column. 

The Analyst

Wells Fargo’s Timothy Condor maintained an Outperform rating on Mattel with a $19 price target. The analyst maintained a Market Perform rating on Hasbro with a $95 price target.

The Thesis

Toymakers Mattel and Hasbro shares are heading in opposite directions. Year-to-date Mattel has shed 32 percent, while Hasbro is up 22 percent.

Now is the perfect time for a potential merger between the two largest toy manufacturers, according to Wells Fargo. “While MAT’s turnaround plan is credible and supported by multiple key external hires, in our view, the ball is firmly in Hasbro’s court should management want to pursue a deal,” said Condor.

Based on conversations with investors, Condor said a $25 per share offer or better for Mattel would likely get a deal done. The analyst said an offer in January “makes the most sense as it would provide HAS visibility on Christmas.”

Despite the reports, neither company has commented on a proposed transaction.

Price Action

Hasbro closed Tuesday's session at $95.05, just about flat; Mattel closed at $18.53, down 1 percent.

Related Links: 

There's Rationale For A Hasbro And Mattel Deal

Why Mattel Is Unlikely To Be A Takeover Target

Photo courtesy of Hasbro.