French private equity firm L Catterton reportedly approached toymaker Mattel with an offer to acquire it. 

Several people told Reuters Monday (July 22), on the condition of anonymity due to the confidentiality of the matter, about the buyout proposal, which could be perceived to be a catalyst for other firms, including toymaker rival Hasbro, to approach the creator of the Barbie and Hot Wheels franchises with similar offers. 

It is understood that Hasbro and Mattel have had unsuccessful merger talks over the years. Mattel also posted a worse-than-expected first quarter earnings report, with an expectation that its second quarter earnings would be similar, if not worse. 

While the merger deal between the two toymakers could still happen and could actually benefit both, it could also face headwinds such as antitrust investigation. 

The sources warned that there was no certainty that L Catterton's offer would convince Mattel to consider a sale. 

After the Reuters report, Mattel's shares jumped 20% to $19.49 per share, which valued it at $6.5 billion in the market. Hasbro shares also increased 4% at $61.25 each.

Both Hasbro and L Catterton were unavailable for comment. 

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Mattel Insists on Remaining Public Despite Downturn

On the other hand, a Mattel representative said that the company declined to comment on the speculation, saying that they were "very confident" in remaining public. 

Mattel has been recently using media partnerships to offset a downturn in toy demand, especially its partnership with film director Greta Gerwig to create a live action film for its Barbie franchise. 

The Barbie film, which starred Margot Robbie in the title role, became a box office hit alongside Oscar grandslam winner "Oppenheimer" in summer last year. 

However, Mattel's share value continued to fall by 23% in the last 12 months, with investors disappointed with the company not being able to profit as expected, especially with the release of the Barbie film. 

In February, activist investor Barington Capital called on Mattel to make significant changes to its operations, including the exploration of options for its Fisher-Price and American Girl brands, as well as separating the roles of the chairman and the CEO. 

Hasbro has also been recently reducing its expenses after experiencing a similar downturn as Mattel's. The company has since sold its eOne film and TV studio to Lions Gate Entertainment for about $500 million in order to focus on more profitable brands such as Monopoly and Play-Doh. 

L Catterton was launched in 1989 and has made over 250 investments in consumer brands and accumulated around $34 billion in assets under its management.

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