Discussion: Could Lego be subject to a takeover?

aldredd

Don't worry, nothing out there to suggest this could actually so hopefully the title didn't scare anyone.
Just thinking out loud, but what do you think are the chances of a major buy out of Thr Lego Group ... I'm thinking by Disney in particular?

Let's face it, a significant chunk of Lego's revenue goes straight to Disney now anyway, and with Lego's foray into media , and the branded parks (albeit Lego only have a partial stake in them) they're soon going to be treading firmly on each others toes - and we all know Disney dislikes competition.

Whilst Lego is now the biggest toy manufacture in the world, it's still small fry compared to the conglomerate that is Disney.

On the other hand, if there is one thing Disney likes more than making money, it's other companies making money for them. (Coming from someone fairly familiar with how Disney's licencing works), so they may well be happy for it to continue down this road ... But I see an end point - not in the next couple of years, but beyond that? Anyone's guess I reckon. (Unless there's something about how the company is structured that simply prevents it from being possible?)

Just thought I'd try and get some thoughts on the matter!

1974

The answer is no. TLG is a familiy company. This is _way_ more important than profit, so no Disney takeover. Ever. Or by another company. Ever. .. Quite simple (and you could exchange "LEGO" for "MÆRSK" and the question/answer would be the same, btw)

Money is not everything

graphite

While I don't think the "ever" is probably the case, I would say under the currently family ownership I wouldn't think it would happen anytime soon. The recent Modulex acquisition with the reasoning that it was important for them to keep it under the family name even though nothing was going to be done with it shows a little about how they see the company.

1974

To put in perspective, "LEGO" is valued at about 25 billion DKR, Kjeld's wallet around 100 billion DKR, so he can rightfullly say 'piss off' to any "friendly" takeover (allthough I'm sure he'll be much more diplomatic than me, haha)

Cheers,

Ole

aldredd

I agree with the sentiment that this is a family business, and they're very protective of their brand. But, times are good at the moment - if times change, and sentiment changes... (Nearly) everyone had a price.

You're probably very right, and I'm not really expecting it, but I think it does raise some interesting questions about their relationship with Disney. What if Disney has a change of heart / better offer from megabloks? That would seriously damage Lego I imagine - it can be dangerous to have a business model where your success is inextricably linked to another's ... Just ask phones 4u ;)

CCC

I assume the contracts with Disney are ones that get renewed long before the end of existing ones. So they'd get quite some time to shift if a contract was ended.

However, the experiment with TLM and ninjago shows they can develop in house IP well, both toys and media (obviously with partners).

Also licensed themes although important, are not the dominant form of income.

aldredd

True, Lego need to maintain a strong portfolio, and do an OK job of that. Whether or not licences are dominant? May have to do a little bit of research on that one to get a better picture. I guess key is ensuring Disney need Lego more than Lego need Disney.

drdavewatford

CCC said:

Also licensed themes although important, are not the dominant form of income.

Correct - licensed properties account for about a third of revenue according to a recent interview with the CEO

aldredd said:

What if Disney has a change of heart / better offer from megabloks? That would seriously damage Lego I imagine....

Now that Disney includes Star Wars as well as the more obvious Disney properties the LEGO product portfolio would undoubtedly look quite different from how it does now if Disney walked away. Would it "damage" LEGO, though? I don't think so - per the earlier metric, LEGO is less reliant on licensed themes than many people imagine.

CCC

Yep, the kids in the playground (5-10 year olds) are all talking about Arctic, not SW.

aldredd

Thanks drwatfordDave - I'd have had it higher than 30% - which is a good thing overall as means Lego are not putting all their eggs in one basket.

1974

You folks don't not know shit

1974

That excludes the Dr ;)

aldredd

Care to enlighten us 1974? Wasn't looking to make assumptions or spark speculation - just though it would be an interesting subject matter for discussion.

1974

Let me put it this way, LEGO is so important to US (<- that be the entire danish population, not the US of A), that I'm quite sure that if we had a public referendum about keeping *LEGO* in DK, the result would be +99% yes. Selling the mermaid or the crown jewels, would be in the low 90's ..

LEGO is real important to us danish folks :)

We like

So no, Kjeld would loose his seat next to the queen and that really don't have a price does it?

binaryeye

1974 said:

LEGO is real important to us danish folks :)

The more relevant question is whether the Danish people are as important to LEGO.

aldredd

I can appreciate that - I would be proud to say the same.
However... Had you put the same question to the British public regarding Cadbury, you would have got the same result. It too was a loved and respected family business.

It was sold to Kraft in 2010

Pray it doesn't happen to Lego :)

1974

binaryeye said:

1974 said:

LEGO is real important to us danish folks :)

The more relevant question is whether the Danish people are as important to LEGO.

That's actually not a question. Study danish history and you'll understand ;)

piratemania7

More importantly here, a takeover would I assume mean TLG is faltering or somehow being threatened in the marketplace? As far as I know its generating revenue likely in the billions, the larger parent company has tons of investments and really is king of the toy world.


So why or how would there be a takeover? Perhaps someone's hittin' the bottle early this weekend...

1974

aldredd said:

I can appreciate that - I would be proud to say the same.
However... Had you put the same question to the British public regarding Cadbury, you would have got the same result. It too was a loved and respected family business.

It was sold to Kraft in 2010

Pray it doesn't happen to Lego :)

Denmark is not a crumbling British Empire .. taunting aside, yes, you're right! But we're so much smaller, LEGO/MÆRSK are actully companies that could ruin the foundation of DK (Cadbury could not fuck up the UK), so wer're muc more carefull

aldredd

A company doesn't have to be struggling for a takeover to happen. The owners may just fall out of love with the company and want out - deal too good to turn down comes along.. Wham. Of course, whilst it's strong it's less likely, but no less possible :)

aldredd

Very true 1974 - I'm sure it would become such a public and political issue they'd make every effort to block. Only wish our government had similar backbone sometimes!

Captain_Eyebrow

@aldredd‌ the last thing we want is someone changing the recipe of the bricks . . . . . . although I always thought Crème Eggs were pretty foul so I'm not sure how they could be made worse!

@1974 all good points although Cadbury never made anything crumbly it was on occasion a bit flaky and certainly quite melty . . . . . :smile:

LusiferSam

The simple answer is no. Lego can't be taken over. It's a private company and private companies can't be taken over. They can be bought or sold. You're dealing with a small group of shareholder, the Christiansen/Kristiansen family, and highly illiquid asset. The family likely has rules and policies in place about ownership and the sale of shares with the purpose of keeping the company private.

The answer becomes more complicated once Kjeld dies. Kjeld is the largest shareholder and controls the most shares. Once he's gone there could be a rogue group sells to an outside party, giving them a foothold or even a controlling interest. Most family businesses don't last into the third generation. So Lego has already beat the odds. Hopefully TLG and the Christiansen/Kristiansen family have plans and buy in from all of the stakeholders for when Kjeld is no longer with us. If they do it's a moot point, otherwise it will be a difficult time.

1974

Don't worry

monkey_roo

I beleive that there really is no scenario that allows for a takeover. When the company was on the rocks in the 90's i am sure there were interested parties, but lego looked within itself to sort out its own mess and I have no doubt if the company ever hit the rocks again they would take the same route.

As for licensing, Disney is not the beginning, middle and end. Lego have deals with other companies and will continue to have, that isn't to say Disney aren't a big deal, they are but the company won't stand or fall by them. And as for Disney themselves they are primerily a content creator and theme park operator, not a manufacturer and they don't want to be.

you can never see the future, but I think it is as safe a bet as there is that TLG isn't and won't ever be for sale or allow a takeover.

binaryeye

1974 said:

binaryeye said:

1974 said:

LEGO is real important to us danish folks :)

The more relevant question is whether the Danish people are as important to LEGO.

That's actually not a question. Study danish history and you'll understand ;)

Why do they have production facilities in Hungary and Mexico? Why are the CMFs produced in China? Are they not favoring profit over local production? Or is the net gain better for Denmark if they do more business by producing in other countries?

1974

Study LEGO history and you'll get a clue ;)

CCC

binaryeye said:

1974 said:

LEGO is real important to us danish folks :)

The more relevant question is whether the Danish people are as important to LEGO.

I don't think they are. Sure, they keep the headquarters there, but shift most of the manual work to low wage economies.

It was only just over a year ago that they announced about 400 workers would lose their jobs due to shifting work overseas.

Legopassion8

I was actually wondering if the Lego Group was interested in buying out Warner Bros. I heard it was for sell. Disney can't own everything! I'm starting to believe Batman is the new 'face' of Lego....

Rainstorm26

Haven't we had some of this conversation before?

http://www.bricksetforum.com/discussion/comment/279578#Comment_279578

Vindic8ed

Did anyone consider the fact the next generation of the family doesn't want to run it? Just because the current generation is all about the family business doesn't mean the next or the next or the next will be. Saying it will NEVER happen is naive. Saying that accidents don't happen is naive. What if they get hit buy a bus on the way home and some distant cousin takes over and just sells it? There's all kinds of scenarios (aside from a "takeover") in which TLG could change hands.

All I'm saying is that it can happen (then Murphy's Law kicks in :wink: ).

plasmodium

Rainstorm26 said:

Haven't we had some of this conversation before?

http://www.bricksetforum.com/discussion/comment/279578#Comment_279578

That's just what happens on a slow day at Brickset. :-) We begin to go over all the old arguments all over again...

ACWWGal2011

The way things are going, lego will be willing to sell it's first born within a couple years so yes a take over, for the right price, is a possibility. Lego is being so money hungry at the moment!

IF the products weren't being basically the same stuff over and over again, we weren't having a ton of quality problems, and we'd have PRINTED parts instead of stickered stuff; then yeah I could justify the cost of sets.

CCC

Vindic8ed said:

Did anyone consider the fact the next generation of the family doesn't want to run it? Just because the current generation is all about the family business doesn't mean the next or the next or the next will be. Saying it will NEVER happen is naive. Saying that accidents don't happen is naive. What if they get hit buy a bus on the way home and some distant cousin takes over and just sells it? There's all kinds of scenarios (aside from a "takeover") in which TLG could change hands.

All I'm saying is that it can happen (then Murphy's Law kicks in :wink: ).

The don't have to run it to own it.

Venunder

Never say never.
TLG might run out of family to run the business. If at the same time the family had money problems, then a big company like Disney could buy them out.

TLG

As people have said, life happeneds, sometimes there are higher priorities than our beloved toy company, and it is completely possible that something bad like the op's proposed situation could actually happen. Not likely, but possible.


/thread

Istokg

OK.... lets put this into perspective....

Ole Kirk Christiansen had 4 sons.... when he died in 1958 they inherited the family business, and the 3rd youngest Godtfred was the smartest and became the managing director after his fathers death.

Then Feb. 4 1960 happened... the big fire that burned down the wooden toy factory/warehouse. Godtfred wanted to stay with plastic but the other brothers didn't... so Godtfred bought them out in due time. Two of the other brothers started another wooden toy company and it tanked by the end of the 1960s.

So Godtfred had 3 kids.. to inherit LEGO from him.... his youngest daughter Hanne died in a 1969 auto accident, so that left just his son Kjeld and daughter Gunhild.

Godtfred died in 1995, and Kjeld and Gunhild inherited the company (although their mother Edith is still alive today at 90, she really isn't part of the ownership).

Then just after the disaster that LEGO experienced early in the 21st century, Kjeld bought out Gunhild's share for over a $1 billion dollars (her son Anders "was" the Modulex owner until now).

So Kjeld now is virtual sole owner of the parent company of TLG... KIRKBI/AS.

Kjeld has 3 kids.... Sofie 36, Thomas 35, and Agnete 32. They each now own 12.5% of KIRKBI/AS, with the other 62.5% owned by Kjeld and Camilla Kristiansen (his wife).

So even though we are now into the 4th generation of ownership.... the number of owners of KIRKBI/AS is still relatively small... and once Kjeld and Camilla are gone, it will be 3 siblings that will own the company. That's much easier to handle (although not always) than first cousins or 2nd cousins trying to manage a corporation.

There you have it!

Kjeld and Camilla....




Agnete, Thomas, Sofie....




Kjeld (and his sister Gunhild's) mother, 90 year old Edith Kirk Christiansen (widow of Godtfred Kirk Christiansen, and daughter-in-law of LEGO founder Ole Kirk Christiansen) is still alive and healthy... but her stake in the company is minimal... but she's well provided for! ;-)






In my LEGO collectors guide there's a new chapter on all 4 generations and the history.