Hasbro approached El Segundo-based Mattel recently with a takeover offer but terms of the proposal were not available, the Wall Street Journal reported Friday, citing unidentified sources familiar with the matter.
If the deal were to go through, it would bring the two largest toy companies in the U.S. and their vast catalog of brands together.
Mattel's shares jumped 20 percent in after hours trading. Both toymakers have struggled in recent years to maintain relevancy in an increasingly digital world, combating consumer trends by injecting more and more technology into their products, and launching their own virtual apps as well. Last month the company suspended its dividend and warned it would miss forecasts for revenue this year. Shares of Mattel have dropped by 47% during the year, valuing the business at just over $4.8 billion and making it a target for a takeover. Hasbro shares were up 3.3%. Hasbro has a value of about $11-billion after a near 18 per cent increase in its stock price in 2017. Mattel stock fell on that day to its lowest since 2009.
This is not the first time the two biggest US toymakers have held talks about coming together.
Representatives for Hasbro and Mattel declined comment on the report, saying they don't respond to speculation.
In 2014, Hasbro held merger discussions with DreamWorks Animation SKG Inc, the studio behind "Shrek", but DreamWorks was subsequently bought by Comcast Corp.