June 18, 2012, 5:27 p.m. Oaktree Capital Management's takeover talks with toy maker Jakks Pacific Inc. have stalled because the companies have been unable to agree on terms for the discussion, according to regulatory documents filed Monday.
It's the latest of several challenges for the private equity firm in its effort to acquire the Malibu company, which makes toys under Nickelodeon, Hello Kitty and Cabbage Patch Kids labels.
Oaktree offered to buy Jakks Pacific last year for $20 a share, but Jakks rejected the offer, saying it undervalued the company. The two sides began talks again in April but those were halted after the two sides couldn't find mutually acceptable terms for confidentiality and standstill agreements. Oaktree already owns a roughly 5% stake in Jakks.
A confidentiality agreement would have encouraged the toy maker to open its books to the private equity firm. And a standstill agreement would have halted Oaktree from making a hostile takeover. Standstill agreements typically limit the number of shares a bidder can buy or allows the target firm the chance to repurchase them.
With about 26 million shares outstanding, Jakks would be worth about $520 million at $20 a share.
Oaktree said in a letter to the toy maker's board that it would resume discussions if Jakks considered terms that it found more acceptable, according to the documents filed with the Securities and Exchange Commission.
"We continue to believe that, with a reasonable level of cooperation, we can offer the company's shareholders a compelling alternative," B. James Ford, Oaktree's managing director, said in the letter.