Toytown was pitched into a billion-dollar takeover conflict yesterday when Barbie, the undisputed queen of the doll market, was sent into battle with Action Man.
The lines were drawn when Barbie's parent company, Mattel-Fisher Price, launched a hostile $5.2bn (pounds 3.45bn) offer for the rival toy group, Hasbro, whose portfolio includes Action Man as well as Barbie's arch rival Sindy, GI Joe and the re-launched Cabbage Patch dolls.
Hasbro has rejected the offer, but if successful it would create the world's largest toy company, with sales of more than $7bn and a sizeable share of the world's pounds 45bn toy market.
It could get nasty. Barbie, the pneumatic blonde whose latest incarnation was a Baywatch beauty, has been top of the toy tree since her debut in 1959. But Sindy, which sells well in the UK but is not available in the US, is certain to put up a fight.
Jon Salisbury, editor of the trade magazine World Toy News, said: "It's all about brands. Mattel is strong in pre-school toys with its Fisher Price range and with the Barbie doll, but it has not had a big boy's toy since Masters of the Universe in 1985. That is Hasbro's strength with Action Man, GI Joe and Tonka toys. This bid was inevitable at some time."
Mattel says it wants to merge with Hasbro because the two have complementary products which when put together would create a stronger group capable of more consistent growth and greater economies of scale. It says it would be able to generate pounds 100m of cost savings in the first year alone.
Toy companies have long struggled to maintain consistent growth in a market dominated by crazes that are often linked to hit films and television shows such as Jurassic Park, Thunderbirds and Batman. A hit generates millions. Expensive flops can cripple smaller companies. The toy industry has seen a spate of takeovers in the last few years. Hasbro bought Waddingtons, makers of Monopoly. Mattel has acquired Fisher Price and JW Spear, makers of Scrabble since 1993.
Analysts in New York said Hasbro's assets had been under-managed. "We believe that some of Hasbro's evergreen brands could flourish much more under Mattel's skilled nurturing and marketing savvy," one said.
But the deal could run into problems, such as difficulties on monopoly grounds as the two are already the largest companies in the sector. Mattel and Hasbro combined would have a 30 per cent share of the $13bn-a-year US toy market and 25 per cent of the UK's pounds 1.6bn market. Mattel hopes to avoid such problems, possibly by selling parts of Hasbro.
Another potential stumbling block is the contrasting culture of the two companies. Mattel was founded in 1945, is based in Los Angeles and regarded as an aggressive company which focuses strongly on profits. Hasbro was founded in the 1920s, is based in Rhode Island, and the founding Hassenfeld company still controls a large stake. It is known as a paternal employer that donates large sums to charity.
Hasbro performed strongly in the 1980s but has under-performed recently. It had a hit with Jurassic Park in 1993 but failed to follow it up last year. In recent meetings the company's chairman, Alan Hassenfeld, has admitted that the company needed to be more aggressive.
Meanwhile Mattel's fortunes have blossomed, fuelled by Barbie sales, which now account for $1bn of the group's pounds 3.65bn yearly sale, and the takeover of Fisher Price in 1993.
Analysts say that a white knight could yet rescue Hasbro. Disney has been mentioned as one possibility. Others say that even if the bid fails, Mattel may have weakened Hasbro sufficiently to force a break-up.
But one thing is certain. With the UK toy fair due to start in London tomorrow and the world equivalent scheduled for the US next month, this bid will be the talk of Toytown.
How the toy giants measure up
Key brands: Sindy, Action Man, Tonka, Waddington (Monopoly), GI Joe, My Little Pony, Playskool.
Sales (1995): $2.86bn (pounds 1.9bn).
Profits: $175m (pounds 115m).
Head office: Rhode Island.
Culture: Still partly owned by founding Hasselfeld family. Paternal and caring. Helps charities.
Key brands: Barbie, Scrabble, Cabbage Patch dolls, Hot Wheels.
Sales (1995): $3.65bn (pounds 2.4bn).
Profits: $370m (pounds 244m).
Head office: Los Angeles.
Culture: West Coast style, with an aggressive go-getting management. It is focused on profits above all else.