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

The US market has seen a flurry of mergers and acquisitions among the smaller toymakers.
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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.”


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