MONTREAL – Mega Brands is gearing up for what is expected to be among the largest toy launches in its history by teaming up Mattel to develop construction toys based on iconic brands Barbie and Hot Wheels.
The toys developed under the multi-year licensing deal with the world’s largest toy maker (NASDAQ:MAT) will be available in stores starting in the spring of 2013, the companies said in a release.
“Mattel is home to the most impressive brands in the toy industry and their global reach is unparalleled,” said Mega Brands chief innovation officer Vic Bertrand.
“We are thrilled to join forces with them to create the first Mega Bloks building sets based on Barbie and Hot Wheels.”
The partnership will give both boys and girls a new way to play with their favourite toy brands, said Rosa Zeegers, senior vice president of global consumer products licensing for Mattel.
“We look forward to continuing to build upon the transformative play experience girls have come to expect when they play with Barbie, as well as giving boys the steering wheel to customize their own Hot Wheels brand products.”
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The toys will include a range of construction items including figurines, houses and cars.
Mega Brands wouldn’t disclose the potential value of the deal but Neil Linsdell of Versant Partners said it should help the Montreal-based company achieve its goal of returning to US$500 million of annual revenues within a few years.
“At the very least, it solidifies that number as being extremely achievable,” he said in an interview.
Mega Brands could do no better than partnering with the maker of the world’s top girls’ brand and top-three boys’ brand, he added.
Everybody looks at Lego as being the construction toy company, but picking Mega is “a fantastic endorsement for what Mega Brands brings to the table.”
“I would guess it would be the biggest product launch they’ve ever had,” Linsdell said pointing to the fact that it’s a global licence that could go on for years.
Mega Brands has high hopes for the partnership, but was more guarded about the deal’s potential.
“It’s certainly an important one because we’re talking about iconic brands and some of the top brands in the world, but it’s probably premature to talk about the biggest and largest,” said Genevieve LeBrun, vice-president marketing and business development.
Still, Linsdell believes the contract could lead to Mega Brands making construction toys for other Mattel lines.
“It kind of really opens the door to bigger and better and a more expansive relationships with Mattel in the future.”
The deal with Mattel also removes doubts that its Thomas & Friends contract is in jeopardy as a result of Mattel’s purchase of Thomas creator Hit Entertainment, he added.
Unlike Disney toys that are tied to movie releases, Barbie and Hot Wheels are “evergreen” brands that remain strong sellers, especially for children four to eight years old.
The tie-in with Barbie also helps Mega Brands expand its construction toy offering to girls, which already includes Hello Kitty, Moshi and Smurfs.
“It’s not our second (girls offering) but it’s an additional one and an impactful one with the iconic brand of Barbie,” LeBrun said in an interview.
Although the toys will be designed in Montreal, it hasn’t been decided if they will be manufactured in Canada or China. So it’s premature to know if any hiring will be required in Quebec, she added.
Mega (TSX:MB) shares closed at $6.58 in Thursday trading on the Toronto Stock Exchange, a gain of 1.2 per cent, or eight cents.
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