The world's largest toy maker, Mattel, has acquired the second largest consumer software publisher, The Learning Company, for $US3.8 billion.
The combined forces form a children's software and toy-making titan. Mattel, the maker of Barbie dolls, Hot Wheels, and Fisher-Price toys, said the merger transforms Mattel from a "traditional toy company to a global children's product company", said Jill Barad, Mattel's CEO.
In June, The Learning Company acquired rival Broderbund Software, the makers of Myst, for about $US420 million in stock.
"Interactivity is the future, and the future is now," Barad said. The Learning Company publishes software series including Reader Rabbit, The Oregon Trail, Sesame Street, Carmen Sandiego, and others. The companies will focus on opening new direct sales channels online and developing new high-tech toys.
Mattel's acquisition of The Learning Company is a smart move, says Anya Sacharow, analyst with Jupiter Communications.
Sacharow said the deal will pave the way for Mattel to become a "twenty-first century toy company".
Consumers can expect to see a lot more of Mattel online, as the company chases its smaller, nimbler competitors that are succeeding in online toy sales, Sacharow added.
Mattel's Barad said the combined companies will form the third largest entertainment software publisher behind Microsoft and number two Electronic Arts.