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Train company buys car firm
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01/05/2008
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Model maker Hornby announced today (1 May) that it had agreed to buy rival Corgi, famous for its die-cast toy cars, for £7.5 million.
The acquisition will include the brand, tooling, and
intellectual property rights from NASDAQ quoted Corgi. It also includes the revered old Bassett-Lowke 'O' gauge model railway brand.
Corgi is one of the oldest manufacturers of collectible die-cast models of trucks, buses, cars and aeroplanes in the world. Corgi's famous model vehicles captured the imagination of millions of baby boomers and are now highly sought-after in the expanding collectibles market. Currently, its principal markets are the UK, the US and Northern Europe.
Corgi was established by the Mettoy Company in Northampton, which first started to produce pressed metal toys in the 1930s. The Corgi brand for die-cast models was born in 1956 and at its height, was selling millions of toys a year, including the Batmobile, the Lotus John Player Special Formula 1 car and James Bond's iconic Aston Martin DB5.
More recently, production has been moved to lower cost plants in the Far East. Hornby itself now manufactures its UK-designed models in China.
Hornby said the Corgi product range was highly complementary to its existing hobby brands, which include Hornby, Lima, Jouef and Rivarossi in model railways, Scalextric slot car racing cars, Airfix models and Humbrol paints.
As part of the acquisition, Hornby is also acquiring Bassett-Lowke, an 'O' gauge model railway brand. Bassett-Lowke operates at the top end of the model railway market and will add another range of products that complements Hornby's existing model railway portfolio.
Hornby chief executive Frank Martin said he was delighted with the acquisition. “It is a fantastic brand and has a superb reputation worldwide. We intend to build on the brand's super heritage and invest to build its premier position in the market. The strategic fit with our existing businesses could not be better. We are confident that we will grow the scale of the business rapidly and drive it forward. The team at Hornby has the expertise and a successful track record in managing a portfolio of famous hobby sector brands that have flourished under our stewardship. We have set in place a detailed integration plan to ensure that we improve Corgi's performance rapidly. We will focus on product innovation, improving the distribution network and driving sales growth both in the UK and internationally.
A statement issued to the London Stock Exchange said Corgi’s fixed assets at completion had a book value of around £1.4 million. The balance is being pain for goodwill, trademarks and intellectual property. In addition, existing inventory will be acquired for around £0.8 million – all to be funded from Hornby's banking facilities.
In the year to 31 March 2008 the acquired assets generated sales of some £6.5 million. As Corgi formed part of Corgi International Limited it did not report profitability as a separate entity. However, performance in the year to 31 March 2008 was disrupted by a number of one-off items. Hornby said it will focus on managing the brand for growth. Key existing marketing, sales and development personnel will be retained, while currently outsourced logistics will be integrated into the Hornby structure along with sales administration, finance and operations. It plans to strengthen the product range and improve the marketing and distribution support.
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Author
Ken Hurst
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