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Marvel, Toy Biz Worldwide Part Ways


Marvel, Toy Biz Worldwide Part Ways

Marvel Ent. Inc. has terminated its licensing agreement with Toy Biz Worldwide Ltd. a year before the arrangement was scheduled to expire. Marvel-branded action figures and other toys formerly produced by Toy Biz will be made by Marvel in 2006 as the company prepares to shift toy development, manufacturing, shipping and other operations to Hasbro in 2007.

“While Marvel will own any inventory produced for 2006, our policy of predominantly manufacturing to order should help mitigate our inventory risk,’ says Marvel chairman Morton Handel.

The combined percentage royalty and fees coming in from Hasbro will be generally lower than those paid by Toy Biz Worldwide, but Marvel believes its brand and sales will benefit greatly from Hasbro’s strong worldwide marketing, promotion and distribution network. In addition, Hasbro will pay Marvel a non-refundable advance of $100 million.

As a result of the early termination, Marvel will pay Toy Biz a penalty of $13 million-$16 million. This one-time cash charge will be recorded for the fourth quarter of 2005, but is not reflected in the company’s financial guidance for the year. Meanwhile, the Hasbro license is conditioned on its clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

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