Toy war takes a new twist

WILL Street Shark triumph over Action Man? That was on the lips of every toy buyer at the 1996 UK Toy and Hobbies trade fair that opened at London's Olympia yesterday.

Street Shark, a menacing half-man and half-shark model that will splash across British TV screens later this year, is the latest offering from Mattel, the world's largest toy company. Action Man, owned by world number two, Hasbro, was the leading UK boy's toy in 1995, and Mattel hopes to rip chunks out of its market share.

The vicious battle for toy dominance between the two US giants took its latest and most spectacular twist last Wednesday, as Mattel launched a $5.2bn (pounds 3.5bn) hostile bid for Hasbro.

The excitement sent shares racing in the few remaining UK independents, such as Mighty Max maker Bluebird Toys, but seems certain to fall foul of competition watchdogs in the UK.

Mattel and Hasbro already dominate the pounds 1bn-plus toys and games market in the UK after snapping up British household names. In mid-1994, they fought a bitter pounds 62m war for Scrabble maker JW Spear, when Mattel's Barbie beat Hasbro's Sindy to the altar in what was billed as the battle of the dolls.

Five months later, Hasbro took revenge with a pounds 50m bid for Waddingtons, marrying Monopoly, Cluedo and Subbuteo to its range. That made it the biggest player in UK market, with a 12 per cent share, but over 50 per cent in board games, while Mattel holds 9 per cent overall.

Mattel's global sales reached $3.7bn in 1995 to Hasbro's $2.9bn. But hugely more profitable, its $7.1bn market value was well ahead of Hasbro's $2.7bn before the bid.

UK toy experts, however, are doubtful whether the takeover will be allowed proceed in the UK. "Fierce rivalry between the two is a benefit to consumers and retailers," said Peter Brown, chairman of trade fair organiser, the British Toy and Hobbies Association. "I expect the Office of Fair Trading and the Monopolies and Mergers Commission to rule it out."

In certain toy segments, the two combined would have a commanding position. In girl's dolls, for instance, Mattel's Barbie has 55 per cent of the market share, while Hasbro's Sindy has up to 30 per cent.

That the two companies are controlled outside the UK will not prevent the OFT or MMC examining a merger, while the European Commission might also take a look.

"The two businesses have to remain separate while an investigation goes on," an OFT spokesman said. Hasbro's take- over of Waddingtons was the last toy merger examined by the OFT. The then President of the Board of Trade, Michael Heseltine, overruled the OFT's advice to go for an MMC probe, but his successor Ian Lang might take a different view this time because of the sheer scale of the bid.