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(Reuters) - The U.S. toy industry looks set for a flurry of mergers and acquisitions between smaller toy makers in the aftermath of the Toys ‘R’ Us bankruptcy, as they seek more scope and negotiating power with big box retailers Target (TGT.N) and Walmart (WMT.N).

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Closing down signs are seen outside the Toys R Us store in Liverpool, Britain, March 19, 2018. REUTERS/Phil Noble

Smaller toy companies that traditionally relied on Toys ‘R’ Us as a launch platform to sell and promote products, say it is difficult to develop relationships with mass retailers, which now have the country’s biggest toy departments.

They say retailers are increasingly picky about allocating display space, preferring billion dollar well known brands like Mattel’s (MAT.O) Barbie and Hot Wheels and Hasbro’s (HAS.O) Marvel Superhero action figures.

“If you’re a young brand, it’s hard to be found,” said Shaun Rein, an analyst with China Market Research Group, who covers Asian toy producers.

    “A lot of the smaller niche brands that you’d buy because you’d seen (them) while browsing in Toys ‘R’ Us are going to be hit very hard.” With Toys ‘R’ Us out of the picture, retail power has shifted to Walmart, Target and Amazon, said Jackie Breyer, editor-in-chief of industry magazine The Toy Book.

Consolidation helps smaller toy firms get their name out and get products on shelves as they will have a bigger portfolio of products for a mass market retailer to choose from, she added.

The total value of deals in the U.S. toy industry has soared to $962.7 million since Toys ‘R’ Us filed for bankruptcy on Sept. 19 last year, compared to $85.4 million in the same period a year ago, according to Thomson Reuters

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