In a somewhat mystifying development, renowned distressed debt investor Oaktree Capital Group LLC (NYSE:OAK) has proposed a revised confidentiality and standstill merger agreement to toy-maker JAKKS Pacific, Inc. (NASDAQ:JAKK).

Oaktree logo

It may be noted that takeover negotiations between the two parties failed in June after a hostile takeover attempt by Oaktree Capital Group LLC (NYSE:OAK), following the rejection of its $20 a share offer that would have valued the deal at $670 million. JAKKS Pacific, Inc. (NASDAQ:JAKK) had also adopted a poison pill defense, to ward off the takeover. Talks were held between the two at the behest of investor Clinton Group Inc., but failed. Read about the Oaktree Capital Group LLC (NYSE:OAK) bid here .

According to Reuters, Jakks has confirmed that Oaktree had divested its entire holdings in the toymaker, but was making a last-ditch effort to break the deadlocked discussions. As of May 15, Oaktree held almost 6 percent of Jakks.

Analysts are puzzled as to what the revised proposal could achieve, given that Oaktree no longer has the strength of its holding in the company, and had previously dismissed the terms proposed by Jakks.

Oaktree is the world’s largest distressed debt investor, recently turned public. Oaktree was founded by the legendary value investor, Howard Marks. In early August, it reported its first quarterly result as a public company, growing its revenues by 13 percent and profits by 6 percent. “We still need the development of some events that are going to scare the hell out of people,” Chairman Howard Marks said at the recent Morgan Stanley (NYSE:MS) Financials Conference. “That’s what gives rise to that great environment where everybody wants to sell and nobody wants to buy. That’s the raw material for our greatest returns.”

Jakks reported its second quarter earnings last month. Though net sales increased to $145.4 million from $131.9 million net income was only $0.1 million, and missed analysts’ estimates. This was the fourth quarter on the trot that the company missed. But its new line of toys, based on Disney’s Brave movie, was a huge hit. It has also entered into an innovative partnership with image recognition technology firm NantWorks.

Many assumed that the battle for JAKKS Pacific, Inc. (NASDAQ:JAKK). In a research report by BMO Capital markets from earlier this week states:

We think the battle for control of JAKK is now over. Therefore, from this point forward, shares should be valued on the merits of the business without support from takeover talk. However, should shares get hit on an executional misstep similar to 4Q11, we would not rule out another run by Oaktree. Early reads on JAKK’s products at retail indicate good placement, but with end results still mixed.