Buyout firm makes hostile bid for Jakks

Investment management firm Oaktree Capital Management has proposed to take Jakks Pacific Inc. private for about $544 million in cash after failing for months to persuade the toy maker to work out a friendly deal.

Malibu-based Jakks replied that its board would consider the $20 a share proposal but added it intended to “continue to act in the best interest of the company and its shareholders.”

Jakks shares climbed $3.83, or 24 percent, to $19.83 in morning trading Wednesday.

Oaktree’s $20 per share price is a 25 percent premium to Jakks’ closing stock price Tuesday of $16. Jakks has approximately 27.2 million shares outstanding, according to Thomson Reuters.

Oaktree values the deal at $670 million.

Jakks designs and sells action toys under trademarks including Disney, Hello Kitty and Cabbage Patch Kids.

Jakks President, Secretary and CEO Stephen Berman said in a letter sent to Oaktree that Jakks’ board will consider Oaktree’s “indication of interest” and would advise Oaktree once Jakks’ board has reviewed the proposal.

In a letter sent to Jakks’ board on Tuesday, Oaktree said that it has been trying to work out a buyout deal with Jakks since March, but that its efforts have been rebuffed. Oaktree Funds has an approximately 4.9 percent stake in Jakks.

Oaktree said it is willing to increase its offering price if Jakks can show that there is further value in the company.

The company said Oaktree Funds is ready to provide “substantial capital resources” to help Jakks pay for future acquisitions, new licenses and its growth strategy.

Oaktree said it could move forward on a deal immediately and would likely be able to get committed financing for the proposed buyout, as well as complete due diligence, within 60 days.

The Los Angeles firm also said that it is ready to take its offer directly to Jakks’ shareholders if it feels that it needs to.