👉 Background: Mattel is the the toy company behind brands like Barbie, Hot Wheels, Fisher Price, Uno, Barney and more than 50 other brands. After releasing the Barbie movie last year, their share price shot up 22%. But this year - there have been major concerns about Mattel’s profitability.

👉 What happened: Now, there are reports that L Catterton, the private equity firm part-owned by LVMH, has approached Mattel about a potential acquisition. With more than $34 billion USD under management, L Catterton could have the firepower to acquire the whole of Mattel in one big gulp.

👉 What else: Shareholders are loving this rumour which saw Mattel's share price jump 20%. And it's likely that this buyout approach will bring more buyers to the table…like arch-rival Hasbro. There’s nothing like strong competitive tension in an acquisition process.

What's the key learning?

💡Competitive tension is the pressure felt by a potential acquirer when they are aware that there are multiple other parties also trying to acquire the same company.

💡If you have a number of potential acquirers interested in your business, it gives the company and its shareholders a ‘choice’ of exit options and competitive tension in M&A processes can significantly increase the sale price.

💡Research at Columbia University was done on 780 public U.S. M&A transactions from 2004-2017 and found that competition among bidders for public companies leads to an average of 5.99% increase in the takeover price. So Mattel will be trying to bring as many parties to the table as possible to get the best outcome for its shareholders.