Toy giant Mattel disclosed late Thursday that the company received an anonymous whistleblower letter earlier this week and is now investigating the matter. Shares plunged more than 15% on the news.
Mattel said in a terse filing with the Securities and Exchange Commission that it canceled a debt sale that was planned to close Thursday to give the company “an opportunity to investigate the matters set forth in the letter.”
The company did not provide details about what was discussed in the letter, namely the nature of the allegations or when any possible wrongdoing took place. Mattel was not immediately available for comment.
The company has had three CEOs in the past few years.
Chris Sinclair stepped down in 2017 and was replaced by Margo Georgiadis, who Mattel hired from Google to help Mattel focus more on high-tech interactive toys.
But Georgiadis announced she was leaving just a year later to take over Ancestry.com, the genealogy site. Ynon Kreiz, a former television studio executive, is now CEO of Mattel.
Shares of Mattel have come back strong this year under Kreiz. Prior to Thursday’s disclosure, the stock had surged nearly 35% in 2019.
Sales during the 2018 holiday season were better than expected, because of the success of core franchises such as Barbie and Hot Wheels. Mattel also announced a deal earlier this year with Sanrio, the owner of the Hello Kitty franchise, to develop toys and games based on the Hello Kitty character and her many friends.
Mattel is looking to capitalize on its popular brands in Hollywood. It has plans for a live-action Barbie movie starring Margot Robbie as well as a live-action Hot Wheels film. Both will be produced by Warner Bros. (The studio is owned by CNN parent company AT&T.)
But last year was a tough one for Mattel and its top rival, Hasbro. The Toys “R” Us’ bankruptcy eliminated one of their largest partners from the market. Both companies now rely heavily on Walmart, Target and Amazon for sales.
MGA Entertainment, the toy company that owns the Bratz and L.O.L. Surprise! dolls, has also made several unsolicited takeover offers for Mattel that Mattel has rejected.