Mattel, Inc. (NASDAQ:MAT), the world’s largest toy maker by sales, has announced today a definitive agreement to buy Canada’s Mega Brands Inc. (TSE:MB) for about $460 million.

Mattel

The deal envisages Mega Brands Inc. (TSE:MB) shareholders receiving C$17.75 a share, a premium of 36% over where Mega shares closed Thursday.

Mattel expands into fastest growing segments

Mattel, Inc. (NASDAQ:MAT)’s acquisition through a wholly-owned subsidiary of Mattel Inc. would advance Mattel’s global growth strategy of building upon its world-class portfolio of brands through expansion into two of the fastest-growing toy categories.

MEGA Brands, a family of leading global brands, is the No. 2 player in the $4-billion construction building sets category with its MEGA BLOKS brand as well as a competitor in the $2 billion arts and crafts category.

Exuding confidence at the acquisition, Bryan G. Stockton, Mattel Chairman and CEO said: “A key pillar of our global growth strategy is the strategic acquisition of brands that will both benefit from our scale and help extend our reach into new and growing categories. The construction play pattern is popular, universal and has had one of the fastest growth rates over the past three years. We look forward to helping MEGA Brands accelerate its global growth, providing more choices for more children and their families.”

Mattel’s disappointing fourth quarter performance

Last month, Mattel, Inc. (NASDAQ:MAT) posted disappointing sales results for the fourth quarter. Its net sales declined 6% to $2.11 billion from $2.26 billion in the same period last year. Conceding his company’s poor performance, its chairman said: “By every account, 2013 was a challenging and transformative year at retail.  Overall, the global toy industry held up pretty well, but we did not meet our growth expectations for the fourth quarter, or the full year, mainly driven by weakness in the U.S. market.”

However, he exuded confidence about performance in 2014 with the strongest global portfolio of brands, countries and customers in the toy industry.

Mattel, Inc. (NASDAQ:MAT) stock is down 22% so far this year.

Mattel, Inc. (NASDAQ:MAT) put the Mega Brands Inc. (TSE:MB) deal at a U.S. enterprise value that includes debt at $460 million. Mega produces Mega Blocks, a competitor to Denmark’s Lego A/S construction toys.  Mattel said it would maintain Mega’s Montreal headquarters. Canada’s Mega Brands Inc. has about 1,700 employees in 17 countries.