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The details:
Ticker: TOY
Offering size: 12,225,000 shares, 14,05,750 with over-allotment
Offer price: $18.00
Market-cap at IPO: $220 million to $253 million
Use of proceeds: Largely to pay down debt
Dividend strategy: No plans to pay a dividend in near-term
The Company and Industry:
Spin Master is a global children’s entertainment company that designs, manufactures and sells toys and games. The company has grown from 49 product lines in 2010 to 69 product lines in 2014. Spin Master is known for a technological or robotic component in its toys with product lines such as Air Hogs and Meccano. The toy market is a global market and traditional toys and games would be classified as more of a mature industry, growing roughly 4% annually. The United States makes up just over 25% of the global market, with Western Europe making up another 25%. The toy and game market is comprised of three large manufacturers (Mattel, Hasbro, Lego) who make up ~43% of the market share with the next seven largest companies making up only 18% of the market, showing some fragmentation. Spin Master estimates a 2.8% market share in the US and is the 5th largest company in the US toy industry. The toys are primarily distributed through mass retailers and discount retailers.
The Revenue:
Gross product sales have grown at a CAGR of 12% over ten years and 30% over the last two years. Gross product sales in 2014 amounted to $812 million, which led to $716 million in revenue. Gross product sales are broken down into 33% remote control and interactive characters, 24% boys’ action and high-tech construction, 23% games, puzzles and fun furniture and 20% pre-school and girls. 72% of these revenues are derived from North America with 17% from Europe and 11% from the rest of the world.
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