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Mattel announces $500-million stock buyback as Carl Icahn takes a stake

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Billionaire investor Carl Icahn has taken a stake in toy giant Mattel Inc., which announced that its board had approved buying back more stock and increasing its annual dividend.

The $500-million buyback is part of the company’s ongoing program, announced in February 2003, under which Mattel has repurchased about 117 million shares of common stock for about $2.3 billion.

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Additionally, the company announced that its board had approved the company’s annual dividend for 2010 of 83 cents a share, an increase of 11% over the 75-cent annual dividend paid in 2009. The company also said it would switch from paying dividends on an annual basis to a quarterly basis starting in fiscal year 2011.

The moves helped Mattel’s stock surge more than 5% on Tuesday morning on a down day for the market.

Bob Eckert, Mattel’s chairman and chief executive, said the moves demonstrated the board’s “commitment to returning excess funds to stockholders.”

Sean McGowan, a toy analyst at Needham & Co., said it was too early to know Icahn’s intentions in taking a stake in Mattel. He noted the investor’s stake amounted to 2.4 million shares, less than 1%.

“The position he’s announced is tiny and not indicative of being able to flex some muscle,” McGowan said. “But it could just be the beginning and it could lead to something bigger.”

-- Andrea Chang

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