Has the Toys R Us collapse kickstarted a new merger trend?

The total value of merger and acquisition deals in the US has soared to $962.7 million since Toys R Us filed for bankruptcy in September last year.

The figure compares to the far more modest $85.4 million for the same period a year before, according to Thomson Reuters data.

Reason for the recent flurry of mergers and acquisitions between smaller toymakers in the US has been highlighted as an attempt to establish a greater presence in the market and greater negotiating power with retailers like target and Walmart.

Smaller toy companies that traditionally relied on Toys R Us as a launch platform to sell and promote products say that it is difficult to develop relationships with mass retailers, which now have the country’s biggest toy departments.

According to those, retailers are increasingly picky about allocating display space, preferring billion dollar well-known brands such as Barbie, Hot Wheels or Marvel.

Toys R Us has often been seen as the market entry retailer for many of these smaller toymakers.

With Toys R Us out of the picture, retail power ha shifted to Walmart, Target and Amazon. Consolidation helps smaller toy firms get their name out and products on shelves.

“When you’re a smaller sized company, do you say that maybe it’s a better strategy to merge with another company or to perhaps to be acquired so that you get more scale?” said Bob Wann, chairman of the Toy Association in the US and the CEO of the toy company Playmonster.

“I think more companies will think about considering that than perhaps they did in the past.”

About Robert Hutchins

Robert Hutchins is the editor of Licensing.biz and ToyNews. Hutchins has worked his way up from Staff Writer to the position of Editor across the two titles, having spent almost eight years with both ToyNews and Licensing.biz, and what now seems like a lifetime surrounded by toys. You can contact him by emailing robert.hutchins@biz-media.co.uk or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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