VTech Holdings Ltd has agreed to buy LeapFrog Inc. in a deal valued at $72 million, according to Reuters. After the acquisition, LeapFrog will become wholly owned by the Hong Kong-based company.

As a part of the deal, VTech will pay $1 a share for LeapFrog, Bloomberg reported. This amounts to a 75-percent premium over the toy-makers closing price on Thursday. The merger is expected to begin in March.

LeapFrog's sales have been falling in recent years, with the company reporting $339.1 million in sales for 2015, Nasdaq reported. These were the company's lowest sales figures since 2002.

The toy company once produced highly popular children's learning devices, but demand has fallen drastically as more and more competitors have entered the market. LeapFrog's biggest competition comes from Apple's iPad, as well as other tablet devices.

With the help of VTech, LeapFrog hopes that its educational products will find a new place in the ever-evolving market.

"The acquisition will allow us to offer the broadest portfolio of products that enhance the education and development of children," VTech CEO Allan Wong said.

This announcement comes amidst rumors that other mergers will take place in the toy industry, such as that of Mattel and Hasbro.