VTech’s US$72m LeapFrog takeover gets go-ahead from British regulator
Competition and Markets Authority says merger may not be expected to result in a substantial lessening of competition in the supply of learning toys
Britain’s Competition and Markets Authority (CMA) has provisionally cleared the merger between Hong Kong-listed VTech Holdings, the world’s biggest maker of electronic learning toys, and US rival LeapFrog Enterprises.
According to the regulator, an independent panel of investigators has “provisionally found that the merger may not be expected to result in a substantial lessening of competition in the supply of learning toys for 0-5 years old, children tablets and content or future innovation in toys.”
It described VTech and LeapFrog as the two leading suppliers of learning toys as well as children’s tablets and electronic content in Britain.
We looked carefully at competition in the evolving and innovative toy industry, and in particular at learning toys and child tablets, to make sure this merger would not reduce choice for consumers or lead to higher prices
“We looked carefully at competition in the evolving and innovative toy industry, and in particular at learning toys and child tablets, to make sure this merger would not reduce choice for consumers or lead to higher prices,” inquiry chairman Philip Marsden said.
“As part of our inquiry, we obtained the views of consumers as well as those of high street and online toy retailers, and other toy manufacturers.”
Marsden pointed out that investigators were satisfied that post-merger there will be a sufficient variety of learning toys available in the market for children up to five years old.
“We’re now asking for views on these provisional findings and will assess all the evidence before making a final decision,” he said.
VTech, which is also the world’s largest manufacturer of cordless telephones, completed in April its 100 per cent purchase of California-based LeapFrog’s common stock in an all-cash transaction.
In a statement on Monday, VTech chairman and chief executive Allan Wong Chi-yun said: “We have always believed that the combination of VTech and LeapFrog will give consumers greater choice and ensure ongoing innovation of electronic learning toys.”
VTech posted a 5.9 per cent year-on-year increase in interim revenue to US$982.9 million in the six months to September 30 on the back of higher sales in North America and Europe.
Its interim net profit, however, decreased 28.7 per cent year on year to US$71.4 million, mainly due to the one-off costs of integrating LeapFrog.
