Hasbro Inc. agreed to buy Galoob Toys Inc., a toy major that relies on East Asian contract molders for nearly all of its plastic products.
Hasbro of Pawtucket, R.I., agreed to pay about $220 million in the deal, which the parties expect to close in the fourth quarter. San Francisco-based Galoob reported sales of $239.6 million last year, down 16 percent from 1996. Its losses last year amounted to $29.5 million when extraordinary items are included.
``Galoob is a tremendous addition to our rich brand portfolio,'' Alan Hassenfeld, Hasbro chairman and chief executive officer, said in a news release. Hasbro can combine its Winner's Circle racing cars with Galoob's Micro Machines in the fast-growing toy vehicles market. Hassenfeld also said Galoob's Spice Girls line will boost his firm's portfolio.
Contract manufacturers in China make more than 90 percent of Galoob's toys, according to Galoob's 1997 10K form filed with the Securities and Exchange Commission. It steadily has trimmed its supplier base, which was down to 13 by the end of 1997.
Galoob has been stung by fickle toy fashions and retail inventory trends but has been showing improved results. For the six months ended June 30 its loss shrank to $2.9 million from the $15.4 million loss it recorded a year earlier. Sales declined to $70 million from $93 million.
Hasbro mainly relies on plants in the Far East and Mexico for its toys. Restructuring last year cost it $92 million, cutting net earnings to $227.4 million on sales of $3.2 billion. It closed an El Paso, Texas, plant in 1997 and moved production to Tijuana, Mexico. It also shut a major facility in Auckland, New Zealand.