Toy Makers Bicker Over Failed Deal Mattel, Hasbro Trade Jabs As Friendly Talks Turn Hostile

Toy mergers are not child’s play.

Mattel Inc., the No. 1 toy company and maker of the Barbie doll, said Friday it believed it was on the verge of a deal to acquire No. 2 Hasbro for about $5 billion only to be sent back to Go by the marketer of Monopoly.

Among the agreements Mattel said it had reached were that Hasbro’s chairman was to be co-chairman of the new company, with important roles offered to other senior Hasbro executives.

Mattel also said it had raised its price by 11 percent since last weekend’s talks and it had offered to pay Hasbro $100 million if regulators killed the deal on anti-competitive grounds.

The size and timing of that breakup fee was “all that purportedly separated us from reaching a final agreement” on Tuesday, Mattel Chairman John W. Amerman said in a letter to Hasbro Chairman Alan G. Hassenfeld.

Hasbro, which says the deal would only create a long, disruptive antitrust review and end in rejection, chose not to debate Mattel’s “numerous inaccurate statements” in a response, spokesman Wayne Charness said Friday.

It was the third day of acrimonious exchanges. The talks broke off Tuesday. In disclosing its offer publicly Wednesday, Mattel said it was interested only in a “negotiated” deal with Hasbro’s board.

But pressure is increasing from short-term speculators who have bought Hasbro shares and from institutional investors who own two-thirds of the company, said Margaret Whitfield, an analyst with Hancock Institutional Equity Services.

“I think it’s now increasingly likely to become a hostile deal,” Whitfield predicted, saying Mattel may well offer to buy shares directly from Hasbro shareholders if Hasbro’s board won’t accept a merger.

The two companies have a combined 28 percent share of the overall toy market.