RPG Evolution: You Can't Just Buy Hasbro

Picture courtesy of Pixabay.​

"How Much is Hasbro?"​

Recent social media chatter has brought the concept of corporate acquisitions into the public eye, with discussions of potential takeovers of major companies swirling online. Now that the idea is out there, it's worth digging into the feasibility of someone buying Hasbro, and thus Wizards of the Coast (the owners of the intellectual property of Dungeons & Dragons).

This isn't the first time the future of WOTC's independence has come up. One of the concerns floated by Wizards of the Coast during the OGL controversy was that a major competitor, like Disney or Meta, could use the Open Game License to potentially create its own Dungeons & Dragons content, thereby edging Hasbro out of its own market. This precipitated the entire OGL debacle, alienating many small press publishers who used the license, as Hasbro's lawyers sought to add safeguards that prevented just such an event from happening.

It turns out buying a company isn't as simple as "paying for it."

How to Buy a Company: A Step-by-Step Guide​

Hasbro is a publicly traded company. Acquiring a publicly traded company is a multifaceted process involving numerous stages and stakeholders. It’s a complex undertaking that requires careful planning, negotiation, and execution.

• Initial Offer/Expression of Interest: The process typically begins with a formal offer or expression of interest made by the potential acquiring company to the target company's board of directors. This offer outlines the proposed terms of the acquisition, including the price and structure of the deal. This is a far cry from casually mentioning interest on social media.
• Due Diligence: Once an offer is made, the acquiring company conducts extensive due diligence. This involves a thorough investigation of the target company's financial records, legal standing, business operations, and potential liabilities. Teams of lawyers, accountants, and industry experts meticulously analyze every aspect of the target company to assess its true value and potential risks.
• Negotiation and Definitive Agreement: If the due diligence is satisfactory, the two companies enter into negotiations to finalize the terms of the acquisition. Once an agreement is reached, a legally binding document called a definitive agreement is signed. This is where the actual cost of acquisition comes into play. As of January 17, 2025, Hasbro's common stock was trading around $57.34 per share. With approximately 139.5 million outstanding shares, Hasbro's market capitalization sat at approximately $8 billion. A potential acquirer might consider acquiring a controlling stake (more than 50% of the shares). To do so, based on the figures above, they would need around $4 billion. However, the act of acquiring a large number of shares itself would likely drive the price up. The cost of acquiring a controlling stake would therefore be significantly higher than the simple calculation based on the current market capitalization.
• Regulatory Approvals: Depending on the size and nature of the acquisition, regulatory approvals may be required from government agencies such as the Federal Trade Commission (FTC) or the Securities and Exchange Commission (SEC). They can reject offers that they deem inadequate or not in the best interests of the company.
• Shareholder Approval: In most cases, the acquisition must be approved by the shareholders of both the acquiring company and the target company. Hasbro has the authorization to issue up to 600 million shares, and according to their latest quarterly report, they have only issued around a third of that total. This means the company can dilute ownership by issuing additional shares, making a hostile takeover even more challenging. The board of directors also plays a vital role in this process, ensuring that any deal is in the best interests of the shareholders.

It's worth noting that there is no "buyout clause" that allows someone to simply purchase a controlling stake on the open market. An offer must be presented to the board.

Very Different Companies​

The most recent parallel to a company swooping in and purchasing another is Elon Musk's acquisition of Twitter by X Corp, but there's some significant financial differences between Twitter and Hasbro.

While the sheer price tag of the Twitter acquisition ($44 billion) dwarfs Hasbro's current market capitalization (around $8 billion), this doesn't automatically make Hasbro an easier target. Hasbro is a well-established company with diverse revenue streams derived from toys, games, and entertainment. This diversification provides a buffer against market fluctuations—a stark contrast to Twitter's pre-acquisition reliance on advertising revenue and struggles with profitability. This stability makes Hasbro a less risky investment from a lender's perspective, making it much harder to secure the massive debt needed for a leveraged buyout, a key tactic used in the Twitter acquisition.

Unlike Twitter, Hasbro possesses significant tangible assets, including physical inventory, manufacturing facilities, and valuable intellectual property like Dungeons & Dragons and Magic: The Gathering. These tangible assets can be used as collateral for loans, making traditional financing options more readily available. Twitter's assets, on the other hand, were primarily intangible, consisting of brand recognition, user base, and technology—assets that are harder to value and less appealing as collateral for lenders.

Hasbro's shareholder base is markedly different from Twitter's too. Hasbro boasts a diverse mix of shareholders, including institutional investors who typically hold shares for longer periods and are less likely to be swayed by short-term gains. This contrasts with Twitter's shareholder base, which was likely more focused on immediate returns and thus more receptive to a high buyout offer. Securing the necessary shareholder approval for a Hasbro acquisition would likely be a lot harder.

And Yet..​

Twitter was vulnerable to a takeover because the company wasn't performing (and is still not performing to this day). If Hasbro's stock underperforms long enough for the company to consider a buyout, competitors like Musk, Disney, or Meta could make a play. Even then, it’s not a simple matter of having the money; it requires careful planning, negotiation, and execution. There's also the fact that Twitter lost 55% of its value (from its $44 billion purchase price down to its one year anniversary at $19 billion) after X Corp acquired it, making the appettite for another acquisition like this unlikely.

All that said, it's worth noting that, just like his inquiry into Hasbo, Musk's journey into acquiring Twitter began with four chilling words: "How much is it?"

 

[GreyLord]

In a nutshell...

It's hard to buy something outright, if it's not for sale outright. Sure, you can buy bits and pieces of it, but buying all of it (or at least a controlling interest)...if no one's selling it, that's going to be a tough thing to buy.

That said, I've divested a bit of Hasbro stock recently, and now I'm not sure it was wise as some of the Tech stocks I've gotten have hit a smidge extremely recently. Of course, you stick with it and hope for the best in this instance, since selling only loses money (unless they really crash, in which case you would have been wiser selling because some money is better than no money).

Still have Hasbro stock, just not as much as before. They'll do okay this year, but I'm not sure about the year after that. I think it's chancy at this point. The big item will be Exodus I think, unless they have something else coming up the pipeline that's big.

 

[GreyLord]

This is the monkey paw to all the people who want D&D/MTG to "fail" to teach WotC a lesson. Failure doesn't teach a company to be humble, it weakens them to be gobbled up by someone who has even less of your interests at heart. It doesn't need to be Musk or Disney either, Bain Capital or another investment firm need only the opening to get it's fingers into the pie and start draining it for it's value. Take a look at Fandom or White Wolf for what that looks like.

You are not obligated to like WotC. You are not required to play their D&D. But stop with the ill-wishing because the next IP holder isn't going to be Peter Atkinson, it's going to be Jeff Bezos.

Jeff Bezos may not be that bad, TBH.

He may seem to have fallen off the rocker recently, but he got his start because he was really into books (like...really...really into books, think the nerdy kid who reads all the time type of book lover). He also enjoys a good fantasy and likes a lot of the same stuff that we, in these forums, enjoy.

Though his recent actions may not speak on this, he probably would follow D&D far more in how it's already been progressing than many others who may acquire Hasbro should the situation warrant it.

 

[Hussar]

that's not really an answer though, if during the next shareholder meeting someone with the majority of shares were to not confirm the board, the board would be out. At that point them issuing new shares probably is too late / impossible. That is the ambush.

The more interesting part is the 'most likely to themselves', so the board can just hand themselves 2./3s of Hasbro whenever they 'feel like it' and the current shareholders are ok with that and with losing 2/3s of their investment (the company is not worth more, there are simply three times the number of shares now)? Nice poison pill if that is how it works...

You cannot just magically acquire majority shares. That takes time. Like, a lot of time. After all, not everyone who has shares is currently selling them. So, any attempt to gobble up majority shares is going to be noticed very quickly. And, it takes like a day to issue the new shares.

 

[Storyteller Hero]

Twitter's main value was never how much money it made, but how many people it could reach.

Imagine one paying $44 billion for one company in exchange for $440 billion in government contracts awarded (over time) to one's other owned companies.

 

[KYRON45]

So many experts.

 

[Henadic Theologian]

Musk, at this point, is in way too deep with other things to give a whit about a company with toys, games, and a little bit of IP. What he does may impact Hasbro, but he's really unlikely to have time to give Hasbro any personal thought.

Directly, probably, but backing someone else to do it with money, where they do the work is very possible still.

I think we all agree that would be a bad think.

 

[mamba]

Melon Husk is worlds richest troll. Have a beer and ignore him.

oh, am not at all concerned about him buying Hasbro, I just was curious about the technical details behind doing so

 

[mamba]

What people tend to forget is that it's not just about someone buying xyz, but the people currently owning xyz willing to part with it. When you show major interest, the price goes up significantly

if people catch on to the fact that one entity is gobbling them all up sure, but there have been larger takeovers that flew under the radar until it was too late because it is not one entity, it is multiple entities that are all controlled by the same people and they are not doing so in a matter of weeks but over several months to years

You cannot just magically acquire majority shares. That takes time. Like, a lot of time. After all, not everyone who has shares is currently selling them. So, any attempt to gobble up majority shares is going to be noticed very quickly.

no it isn't, it only is if you do not take that time, this has been done before with larger companies

 

[Cergorach]

no it isn't, it only is if you do not take that time, this has been done before with larger companies

Yes, as I said doing it slowly could work. But Hasbro/WotC stock isn't exactly volatile, so there's not traded much (1.5 million per day). As the US stock exchange is only open 5 days per week, and how much can you acquire per day without driving up the price consistently? Maybe 10% if you don't want people to notice? That's 4 years at best (~2 years to control the company). Can that happen? Of course, is that likely to happen looking at the types of people showing interest? Hell, no!

But that still depends on people willing to sell their stock. Those ~1.5 millions shares that are daily traded, they might be the same shares or only a relatively small pool of stock is actually traded per year. Not everyone invests to make quick money, if they don't want to sell, you can't make them. Offer enough money, and they might sell, but then it becomes way more expensive again. If you just want to own D&D, spending $8-$12 billion to do so is not a good investment, most of the people that have that kind of money know this. With $8-$12 billion you can build the largest pnp RPG company ever, create your own IP, do massive marketing campaigns, make a good pnp RPG movie or two, etc. And why $12 billion, when stock prices are only worth $8 billion, because that's what happened last time when EM bought something (Twitter) at an over inflated price...

How you do one thing in life is how you do everything...

That's a very self-serving statement. No! People generally are not one thing, they tend to be many things. Some of the biggest villains did some very good things, they could be loving parents, etc. And some of the people that are viewed as the biggest heroes today, were horrible people in their personal lives.

Have you always been a saint? When you did something stupid/horrible, is that who you are the rest of your life and what you've always been? Better keep up that saintly facade!

I'm not an EM fan, many things he does I do not agree with, but I also have had colleagues I felt the same about. The only difference being is that EM has a LOT more money. shrugs Live and let live.

 

[Koloth]

In the US, I think the 5% ownership level is where you are required to file SEC paperwork stating you own x% of the stock. You can't legally 'sneak up' to 50% +1 share without someone noticing. But lots of hedge funds and other wealthy activists have forced major corporate changes with only a 5~10% stake. Often the threat of increasing a stake will cause a Board or C-Suite to at least listen to what the new large shareholder is demanding. Such tactics often work well when the stock has been under performing the market and/or similar companies. Easier to get other large shareholders to follow along if they are also unhappy with recent stock pricing.