"ORCRP009532-topic.html" class="local_link" >Mattel Inc.
Representatives for Hasbro and Mattel declined comment on the report, saying they don't respond to speculation.
Hasbro, which is based in Pawtucket, Rhode Island, manufactures toy brands including G.I. Joe, Nerf, Transformers and My Little Pony. It also has rights to valuable entertainment franchises.
That prompted S&P Global Ratings to lower its ratings on Mattel's corporate debt, and led one analyst to say that Mattel might be better off as a takeover target.
With a market cap around $11 billion, Hasbro is approximately twice the size of Mattel's $5 billion. "Thus, the company could have value to a financial, industry or entertainment conglomerate buyer".
"Both companies would benefit from a merger, but Mattel stockholders might oppose a deal that values the company on its depressed stock price", said Erik Gordon, a professor at the University of Michigan's Ross School of Business. Mattel's stock surged on the news, while Hasbro saw a 3% bump in after-hours trading. But Mattel's shares are down by almost half this year alone - an appealing discount for Hasbro.
Two decades ago, Hasbro resisted a $5.2 billion purchase bid from Mattel.
Hasbro has made an offer on the beleaguered Mattel after a courtship lasting years.