New World Pictures, the low-cost Los Angeles movie producer that owns Marvel Comics, disclosed Tuesday that it might drop its pursuit of Kenner-Parker Toys.
Kenner-Parker, which makes Care Bears, Play-Doh and the Monopoly and Clue board games, rejected New World's $41-a-share offer last Wednesday, saying shareholders were better off if Kenner remained independent.
On Tuesday, New World said it is now considering several options that range from launching a hostile tender offer for the toy company to selling its 8.4% interest in Kenner-Parker.
Disappointed investors reacted by driving down the price of Kenner-Parker stock. Shares of the nation's No. 3 toy maker closed at $43.625, down $2, in composite trading on the New York Stock Exchange. New World shares closed at $10.25, unchanged in composite trading on the American Stock Exchange.
New World, producer of such films as "Godzilla 1985" and "Reform School Girls," said that if it acquired Kenner, it would develop movies based on Kenner toys. Kenner, in turn, would market toys based on such well-known Marvel comic book characters as Spiderman and the Incredible Hulk.
New World's disclosures came in a filing with the Securities and Exchange Commission. The company also said it paid an average price of $31.18 for each of its its 907,450 Kenner shares. Analysts pointed out that New World would realize an $11-million profit if it sold its Kenner shares at market prices.
New World executives weren't available for comment on Wednesday. In a statement, Lawrence Kuppin, New World co-chairman, said: "We continue to believe that a combination of our two companies would be beneficial to the interests of both."
Dennis McAlpine, an entertainment industry analyst with Oppenheimer & Co., a New York investment firm, said New World appeared reluctant to engage Kenner-Parker in an unfriendly takeover battle.
"They may be trying to invite someone to join them in making a bid for Kenner or to buy their shares," McAlpine said.
It isn't likely a buyer will emerge for Kenner as long as its shares trade above $38, said Barry Rothberg, a toy industry analyst with Mabon, Nugent & Co., a New York investment firm. "It's really at the top of the range of what Kenner is worth," he said.