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California and the West

Bratz Maker MGA to Buy Little Tikes

The acquisition would expand the doll and electronics company's product lineup to target younger children.

September 12, 2006|Abigail Goldman | Times Staff Writer

MGA Entertainment Inc., the maker of puffy-lip Bratz dolls, is getting ready to add toys for its main customers' younger siblings.

The Van Nuys-based doll and electronics company said Monday that it was buying Little Tikes -- the maker of plastic toddler outdoor sets, toy cars and play kitchens -- for an undisclosed sum from Newell Rubbermaid.

MGA said it expected the deal to close in the fourth quarter of this year.

"What Little Tikes brings them is a more diversified product lineup," said Cliff Annicelli, editor of trade magazine Playthings.

"They're certainly bigger-ticket items, which I'm going to guess are slightly more profitable because they're more evergreen -- you don't need to constantly redevelop them like you do electronics."

The acquisition is MGA's second move this year to expand its operations. This summer, privately held MGA acquired 22% of German doll maker Zapf Creation and later announced a joint sales venture with the company to give MGA better access to the European market.

Adding Little Tikes also gives MGA new ground on which to compete with cross-county rival Mattel Inc., the El Segundo-based No. 1 toy maker.

Although MGA's Bratz dolls have stolen market share from Mattel's bestselling Barbie products, MGA until now had no competition for Mattel's top-rated Fisher-Price line of pre-school and toddler toys.

MGA President Isaac Larian said Little Tikes had a strong brand name that had not been properly exploited.

"We are going to take it to the next level," Larian said.

"We're going to keep the plastics and keep it preschool and then add educational toys, dolls, construction toys and radio-control cars, just to give some examples."

Little Tikes, based in Hudson, Ohio, has about $250 million in annual sales, Larian said.

Larian said MGA would bring Little Tikes' product development, marketing and some of its sales operations to Van Nuys. Although final decisions have not been made about Little Tikes' 500 employees, Larian said that MGA would retain the company's Ohio headquarters, as well as most of its worldwide factories.

Jim Silver, editor of Toy Wishes magazine, said the acquisition made sense, given MGA's dolls and electronics toys, as a way to enter new product categories and expand its overall business.

"It's not uncommon in this business to grow through acquisition," Silver said. "If [Larian] wants to be a multibillion-dollar toy company, he needs these acquisitions to grow."

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