Ariel Investments urges Mattel to weigh sale as growth stalls

Ariel Investments, a major Mattel shareholder, has told the toy maker's board that it should consider a sale to the right buyer as the company works through a turnaround, according to a letter from Chairman and Co-CEO John Rogers seen by Reuters and the Wall Street Journal. In the letter, Rogers said a strategic buyer would likely pay a significant premium to Mattel's current share price, and identified entertainment companies and private equity firms as potential suitors.

Rogers laid out a range of options for the company, from divesting significant assets to a merger or an outright sale, according to CNBC. The investor's push adds pressure on a business that has been trying to reverse declining sales of the Barbie doll and other toys.

Mattel responded that it values Ariel's long-standing investment and continued engagement. A company spokesperson told CNBC that the board and management team are committed to acting in the best interests of all shareholders and will consider the views in Ariel's letter, along with those of other shareholders.

The letter arrives with Mattel's stock under strain. Shares were trading slightly lower in premarket trading and are down 19% since the start of the year, according to CNBC. The company is also under new leadership, having named Roger Lynch as CEO and chairman in September. He took over from Ynon Kreiz, who led Mattel for eight years.

Talk of a potential deal follows reports last week that brand licensing firm Authentic Brands expressed takeover interest in Mattel, with a possible offer valued at about $6 billion. Mattel's shares rose 20% on that news, CNBC reported. Mattel was behind the 2023 blockbuster Barbie film starring Margot Robbie and Ryan Gosling.

It remains unclear whether Mattel's board will move toward any transaction. The company has said it will weigh Ariel's views alongside those of its broader shareholder base as it continues to pursue a turnaround.