Jakks Pacific Inc. (JAKK) gained the most in three months after agreeing to meet with Oaktree Capital Management LP, the investor that reiterated last week its interest in acquiring the toymaker.
Jakks also approved a tender offer to buy at least $80 million of its shares for at least $20 each, and will add two independent directors, the Malibu, California-based company said today in a statement disclosing it will meet with and provide information to Oaktree. Jakks rose 4.6 percent to $18.29 at the close in New York for the biggest gain since Jan. 23.
Jakks also entered into an agreement with Clinton Group Inc., a New York-based hedge fund, that gives it approval of new board members in exchange for supporting current directors. Clinton wrote a letter to Jakks on March 14, asking it to undertake a strategic review, including considering Oaktree’s bid.
“We are pleased the board of directors has acted convincingly to increase shareholder value,” Joseph De Perio, a senior portfolio manager at Clinton Group, said in an e-mail. “We are confident that the new board will evaluate a potential offer from Oaktree, and do what is right for shareholders.”
Clinton now owns 4.9 percent of Jakks, De Perio also said.
The shares had gained 9.3 percent from Sept. 13, the day Oaktree made its bid public, through April 20. Today, Stifel Nicolaus & Co. raised its rating of Jakks to buy from hold, with a price target of $23 a share.
Oaktree approached Jakks about acquiring the company in March 2011, according to public filings. The companies met in May and Jakks’s board rejected selling the company in July, saying that pursuing management’s plans to improve results would be better for shareholders. Oaktree went public with its interest and offer of $20 a share in September.
The toymaker posted three straight years of sales declines as U.S. consumers cut back on spending and more children favored video games over the stuffed animals and action figures it offers. Revenue sank 25 percent to $677.8 million last year from $903.4 million three years earlier.
Los Angeles-based Oaktree reiterated its interest in December and met with Jakks’s financial advisers in February and outlined a deal, according to public filings.
The Jakks board adopted a poison-pill defense on March 5 that will last for a year, in response to Oaktree’s desire to buy the company. Oaktree owned 5.1 percent of shares as of Dec. 31.
Oaktree countered by sending another letter to the Jakks board on April 17, saying that it has “no confidence” in the capability of management and the board and that “immediate change” was needed. Oaktree has hired Guggenheim Securities LLC as financial adviser and MacKenzie Partners Inc. as proxy solicitor, according to the letter.
Fidelity Management & Research owns 11 percent as the largest holder, and company insiders have 2.8 percent, according to data compiled by Bloomberg.
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