NEW YORK (CNNfn) - Barbie has a new playmate.
Mattel Inc., the maker of the world's most famous brand name doll, agreed Monday to acquire Pleasant Co., a Middleton, Wis.-based producer of the American Girls doll collection, in a deal valued at $700 million.
As a result of the transaction, Mattel appointed Pleasant Rowland, president and founder of Pleasant Co., as vice chairman of Mattel's board.
"This is a perfect strategic fit," Jill Barad, Mattel's chairman and chief executive, said.
Pleasant Co., which has annual revenue of approximately $300 million, sells its dolls through direct marketing. In addition to the toys, the American Girls brand includes lines of books, clothing and accessories.
"In addition to acquiring a blue-chip brand, we will benefit from Pleasant Co.'s state-of-the-art direct marketing operation," Barad said.
Separately, Mattel said the buying practices of Toys 'R' Us Inc. -- the world's largest toy retailer -- still are affecting sales volume and earnings for the second quarter.
Toys 'R' Us has adopted a new policy of just-in-time purchasing, designed to keep down the carrying costs of inventories.
For the quarter ending June 30, Mattel said it expects earnings to total 20 cents a share -- below the First Call consensus estimate of 25 cents.
Revenue was projected to decline 10 percent due to a reduction of at least $70 million in sales to Toys 'R' Us and a $25 million decrease related to discontinued product lines.
In the 1997 second quarter, the company earned $72.8 million, or 25 cents a share, on sales of $972.6 million.
Despite the second-quarter shortfall, Mattel said it remains "confident" that it can achieve projected earnings growth of approximately 18 percent for the year.
Shares of Mattel (MAT) were down 1-1/4 at 37-3/8 at midday Monday.