Tomy Co. plans to buy major U.S. toymaker RC2 Corp. for an estimated 50 billion yen ($604 million) to offset dwindling domestic demand, Japanese newspaper The Nikkei reported early Friday.
Tomy, which will make an announcement as soon as Friday, is likely to mount a tender offer for RC2. If successful, it will be one of the largest overseas acquisitions by a Japanese toymaker.
In 2009, RC2 paid a a $1.25 million civil penalty for importing and selling toys from China that contained too much lead in the paint. Its lineup includes the popular Thomas & Friends Wooden Railway brand that was part of the lead paint settlement.
In 2010, the Illinois-based toymaker’s sales totaled $427.3 million while operating profit hit $45 million. Listed on the Nasdaq, RC2’s market capitalization is approximately $460 million.
Tomy aims to expand global sales through joint-development efforts and by supplementing their sales channels in Japan, the U.S., Europe and elsewhere in Asia. Costs are likely to be shaved by using each other’s production facilities in China and other countries.
Tomy boasts such longtime sellers as Tomica cars and Plarail train sets, and in recent years has scored a hit with Beyblade, a modern take on a spinning-top game. The toymaker aims to earn 25 percent of its sales overseas in fiscal 2012, up from more than 17 percent last fiscal year, but with limited global brand power and sales channels, going it alone would be difficult.
Japan’s entertainment sector, which includes toys and games, has embarked on restructuring over fears of survival amid a declining population and sluggish consumption. Tomy itself merged with Takara Co. in 2006.
The toy market shrank 0.9 percent, to 649.3 billion yen, in fiscal 2009, slipping for the second year running, according to the Japan Toy Association. This is roughly 10 percent off its most recent peak in 2000.
Bring me candy painted Transformers… or BRING ME DEATH!