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Alleghany's Unit Closes Buyout of Squishmallows Owner Kellytoy

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Alleghany Corporation’s Y wholly-owned subsidiary Alleghany Capital Corporation declared that its subsidiary, Jazwares, LLC has acquired a majority stake in Kelly Toys Holdings, LLC and Kelly Amusement Holdings, LLC, formerly known as Kellytoy Worldwide, Inc. and Kellytoy (USA), Inc., collectively known as Kellytoy.

Founded in 1986, CA- based Kellytoy is a manufacturer of everyday and seasonal plush toys, known principally for its Squishmallows brand. It also manufactures collaborative products featuring leading classic characters such as Care Bears, Strawberry Shortcake and Betty Boop.

Rationale Behind the Deal

The buyout of Kellytoy is the second major acquisition for Jazwares in the past year following its purchase of Wicked Cool Toys in October.

With the acquisition of Kellytoy, Jazwares will get the opportunity to grow into a leading toy industry platform with the combination of Jazwares' unique operating capabilities and Alleghany Capital's financial backing.

Despite the current macro-economic changes, the company continue to foresee solid opportunities in the global toy industry.

This buyout will provide the combined entity of Jazwares and Kellytoy with the opportunity to be a leading supplier in the global plush market and enable it to fully leverage the synergies from the deal.

Alleghany considers strategic acquisitions to be a prudent approach to ramp up its growth profile. Through its subsidiaries, the company pursues acquisitions, which not only widen its geographical presence but also boost its portfolio.

Shares of this Zacks Rank #5 (Strong Sell) property and casualty insurer have lost 14.2% in a year’s time, compared with the industry's decline of 13.9%. Nevertheless, we expect its solid fundamentals to drive the stock in the near term.

Stocks to Consider

A few better-ranked stocks in the property & casualty insurance sector are Donegal Group Incorporation DGICA, First American Financial Corporation FAF and Cincinnati Financial Corporation CINF. While Donegal Group and First American Financial sport a Zacks Rank #1 (Strong Buy), Cincinnati Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group, First American and Cincinnati Financial surpassed estimates in each of the last four quarters, with the average positive surprise being 271.06%, 17.68% and 17.86% respectively.

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