Nice move: Cranium's $77 million sale
The Grand Poo Bah and Chief Noodler are leaving, but the 10-sided die and tub of clay stay. Cranium, the board-game company known for its...
Seattle Times business reporter
The Grand Poo Bah and Chief Noodler are leaving, but the 10-sided die and tub of clay stay.
Cranium, the board-game company known for its egalitarian motto "Everyone Shines," will soon join Monopoly, Clue and Scrabble as part of the Hasbro portfolio.
Hasbro said Friday it plans to buy privately held Cranium for a base price of $77.5 million. Cranium co-founders Richard Tait and Whit Alexander — whose respective job titles are Grand Poo Bah and Chief Noodler — said they will leave the company after seeing it through the transition.
"It's a wonderful opportunity to marry our creativity with their operational excellence and global brand-building capabilities," Tait said, adding that it's unclear what will happen to Cranium's 80 employees in downtown Seattle. "We'll work with Hasbro over the next 60 days on what the organizational structure will look like."
The cash deal, which is still contingent on approval by Cranium shareholders, would make the company a subsidiary of Hasbro, the world's largest distributor of board and card games. For all its games, though, Hasbro has none like Cranium, with its goal of giving "everyone an opportunity to have a winning moment," said Phil Jackson, who oversees Hasbro's games business.
"A lot of people like to play games to win, but there is a segment of the population that enjoys games as a social vehicle, or icebreaker at a party," Jackson said. "It really has its own place in retail and is complementary to our business, as opposed to competitive."
Tait and Alexander left well-paying jobs at Microsoft to start Cranium in 1998 with a plan to offer an alternative to the winner-take-all approach of most board games. The result was a game that required players to sketch, solve puzzles, act, answer questions, hum and sculpt (hence, the tub of clay). They reasoned that players awful at one task could redeem themselves at others, so that no one would feel left out.
Tait and Alexander raised $35 million, mostly from Texas Pacific Group and Seattle venture-capital firm Maveron, which Starbucks Chairman Howard Schultz co-founded. Rather than go the traditional route and sell their games in toy stores, Tait and Alexander distributed to Starbucks, then to Amazon.com and Barnes & Noble.
Cranium has since won the Game of the Year award from the Toy Industry Association five times, and its products are sold in Target, Wal-Mart and Toys 'R' Us. Its other games include Cranium Hullabaloo, Cariboo and Cadoo.
Tait said Hasbro is "showing a lot of acknowledgment of the success we've had to date" — a positive sign, he noted, for Cranium employees concerned about what the future now holds for them. Tait, 43, said he plans to spend time with his three children and visit his parents in his native Scotland after the transition.
Hasbro said money from the deal would be used to cover Cranium's outstanding debt and to pay its shareholders. The purchase price could change depending on Cranium's assets when the deal is finalized, likely sometime before April.
Chris Byrne, a toy analyst who runs the Web site TheToyGuy.com, said the deal is a good fit for both companies: Hasbro gets Cranium's line of successful games; Cranium gets Hasbro's worldwide distribution network. Cranium distributes only a handful of its 40-plus games, books and toys to about 20 countries outside the U.S. and Canada.
"It's not totally unknown internationally, but certainly there's a real opportunity for expansion," Byrne said of Cranium. "Hasbro is huge in terms of its international presence."
Hasbro, which is based in Pawtucket, R.I., and has a portfolio that includes Transformers action figures and Nerf footballs, distributes games in more than 100 countries. The company's international revenues totaled $374 million in the third quarter of 2007, compared with North American revenues of $823 million. Combined, Hasbro's third-quarter revenues represented a 17 percent increase from the same period a year earlier.
"The opportunities for Cranium globally are just beginning," said Hasbro's Jackson. "We don't believe they're anywhere near maxed at this point."
Gerrick Johnson, an analyst with BMO Capital Markets, said the deal makes sense after a difficult 2007, when the toy industry grappled with millions of product recalls and a disappointing holiday season.
"I think you're going to see more consolidation in the industry going forward, and I think this is just the beginning," he said.
Once finalized, the deal would make Cranium the second Seattle-area game company bought by Hasbro in the past nine years. Hasbro took over Renton-based Wizards of the Coast in 1999 for $325 million. Founded in 1990 by then-Boeing systems analyst Peter Adkison, Wizards is known for its trading-card and role-playing games, including Dungeons & Dragons.
The Associated Press and Seattle Times researcher David Turim contributed to this story.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org
Copyright © 2008 The Seattle Times Company
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