Activist Investor Barington Capital Pursues Change in Mattel's Strategy to Enhance Stock Value

Barington Capital has recently acquired a stake in the renowned toymaker Mattel, prompting calls for significant corporate changes. In a letter addressed to Mattel CEO Ynon Kreiz, the activist investor is pushing for a series of strategic maneuvers to rejuvenate the toy company's lagging share price.

Among the suggested overhaul measures, Barington Capital emphasizes the need to contemplate alternative strategies for the Fisher-Price and American Girl brands and address what is perceived as overly generous stock-based executive compensation.

Strategic Business Reevaluation

As per Reuters, the investor's strategic vision includes potentially divesting from the Fisher-Price and American Girl lines, which could streamline Mattel's focus and boost profitability. Barington's analysis points to these divisions as underperforming elements that, if reconstructed or sold, could release value for stakeholders. Interestingly, Barington has advocated for a substantial $2 billion share repurchasing plan, which could further amplify stock value through scarcity.

Corporate Governance and Financial Proposals

According to Seeking Alpha, Barington suggests separating Mattel's combined CEO and chairman roles, currently occupied by Kreiz, to improve leadership clarity and effectiveness. This separation of powers could enhance decision-making and accountability at the helm of the business.

Additionally, Founder James Mitarotonda sees this proposed transformation working symbiotically with ongoing enhancements in Mattel's key departments—namely its core fashion doll and toy vehicle segments. Mitarotonda claims that such systemic changes, alongside existing improvements, could potentially double Mattel's share price within the next three years.

There has been no immediate response from Mattel or Barington Capital to Reuters' request for comment on the matter. However, the news of Barington's involvement and the associated push for a strategy shift has already impacted the market.

After the announcement, Mattel's stock experienced a 5% upswing in after-hours trading, indicating investor optimism about the proposed strategy.

Photo: Mattel Newsroom