Mattel calls off Hasbro merger

MAGNUS GRIMOND

Barbie was left weeping at the altar yesterday after her glittering $5.2bn marriage to Action Man was called off.

Mattel, the US toy giant which owns Barbie, said it was withdrawing its $5.2bn (pounds 3.4bn) offer for Hasbro, progenitor of Action Man and number two in the US toy market, blaming the "intolerable climate" created by its intended's public tantrums following the announcement of its bid last week. The merger would have created the world's largest toy company with sales of over $7bn a year.

In a letter to Alan Hassenfeld, the Hasbro chairman, his opposite number at Mattel, John Amerman, vented his spleen at being spurned. Mr Amerman said Hasbro had "elected to take drastic steps, both politically and through the media, to greatly increase the difficulty of achieving a merger in a timely manner." He went on: "Unfortunately, your 'scorched earth' campaign has created an intolerable climate."

The end of what was billed as toytown's marriage of the century sent Hasbro's shares tumbling in New York and left would-be wedding on Wall Street wondering how it could redeem itself. Immediately after the announcement but before the market opened, the shares plunged $8.75 to $32 - well below Mattel's offer at the equivalent of $52. Dealers were shocked that Mattel could have changed its affections so suddenly. "I guess they felt they weren't up to getting in a protracted mess," said one. Although he believed Hasbro would not be under particular pressure from its shareholders, he said it was not clear what would happen now.

But another was less sanguine, pointing out that Hasbro has not been aggressively managed and needed to take steps to appease shareholders. "It's incumbent on Hasbro to push their stock up", the dealer said.