According to sources, Mattel has informed Hasbro that its proposal significantly undervalues the company.

As reported by Reuters, Mattel has rebuffed Hasbro’s latest takeover approach, people familiar with the matter said on Wednesday, casting uncertainty over the potential combination of the world’s two largest toy companies.

Mattel’s rebuttal indicates that Margaret Georgiadis, who took over as the company’s chief executive in February, is seeking to drive a hard bargain in negotiations with Hasbro. Mattel has informed Hasbro its proposal undervalues the company and does not take sufficiently into account the potential for regulators to reject the deal based on antitrust concerns, the sources said.

Hasbro, which is trying to diversify its revenue stream, also sought to buy US movie studio and entertainment company Lions Gate Entertainment this year, but those talks ended without a deal. In 2014, Hasbro held merger discussions with DreamWorks Animation SKG, the studio behind Shrek, but DreamWorks was subsequently bought by Comcast Corp.