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VTech Acquires LeapFrog

VTech announced it has acquired rival toymaker LeapFrog Enterprises for approximately $72 million.

Full terms of the deal can be found here.

The deal, which is expected to close by the end of March, has been approved by both boards of directors.

“The acquisition will allow us to offer the broadest portfolio of products that enhances the education and development of children across the world, while bringing them fun and joy,” said Allan Wong, chairman and group CEO of VTech Holdings Limited.

The company declined to answer any questions.

The two companies have continuously jockeyed for position in the tech toy category. Both companies manufacture toy tablets and gaming devices for children, a segment facing stiff competition as tablet prices have plummeted and free apps flourished.

Although the overall toy category grew 7 percent in 2015 vs. 2014, reaching $19.45 billion, the youth electronics segment fell 5 percent in U.S. dollar sales, to $600 million, according to The NPD Group. Other than arts and crafts, it was the only toy segment tracked by NPD that declined for the year.  

VTech faced some negative headlines in November when its Learning Lodge app and software system was hacked. It sent an email to users just this week that portions of the system were once again operating.

King F. Pang, VTech Holdings group president, said the company had taken measures to strengthen its data protection with the help of “one of the world’s leading cyber security teams.”