Barington Capital, an activist investor, has acquired an undisclosed stake in toymaker Mattel (NASDAQ: MAT) and urges the company to make significant changes to improve its underperforming stock.
Barington proposes several measures, including exploring strategic alternatives for its Fisher-Price and American Girl businesses, addressing excessive stock-based compensation, and initiating a $2 billion share-buyback plan.
The activist investor, led by founder James Mitarotonda, believes that implementing these actions, combined with improvements in Mattel's core fashion-doll and toy-vehicle divisions, could potentially double the share price in three years.
As detailed in a letter to Mattel CEO Ynon Kreiz, the investor believes the share price will continue to lag without strategic interventions.
Additionally, Barington advocates separating the CEO and chairman roles currently held by Kreiz.
Wall Street Journal, citing a spokesperson for Mattel, noted the receipt of the letter, stating that the company is reviewing Barington's proposals and looks forward to engaging with the investor.
With a market capitalization of approximately $6.5 billion, Mattel has been exploring ways to leverage its intellectual property through ventures such as films, including upcoming projects featuring Hot Wheels, Uno, and Barney.
Barington's critique focuses on Mattel's American Girl and Fisher-Price segments, suggesting that these brands are detracting from the company's overall success and harming shareholder value.
Despite the uncertainty surrounding Barington's campaign, the investor commended Mattel on recent successes, such as the theatrical release of the Barbie movie.
Last week, the company announced plans to develop a feature-length film based on Bob the Builder, the beloved animated children's series.
The movie will be developed together with ShadowMachine, Nuyorican Productions, and Anthony Ramos, the company said in a press release.
Price Action: MAT shares are up 3.59% at $18.93 on the last check Friday.