Acquisition

10 Nov 2006 07:01

Hornby PLC10 November 2006 HORNBY ACQUIRES ASSETS OF AIRFIX HUMBROL Hornby Plc ("Hornby"), the international models and collectables group, hasannounced that it has entered into contracts to acquire certain assets ofHumbrol Limited in Administration (Humbrol), the owners of the Airfix model kitsand Humbrol paints businesses. The acquisition encompasses the Airfix model kitbusiness, the Humbrol paints and model accessories business, the Young Scientistbusiness and their associated assets. These brands are sold in a range ofterritories worldwide and are highly complementary to Hornby's existing brands.In the year to 31 December 2005 the acquired brands achieved sales of £6.5million. Hornby has exchanged contracts with the administrators and will pay totalconsideration of £2.6 million in cash on completion for the assets acquired fromthe Administrators Grant Thornton. Hornby intends to re-structure the business, moving all the distribution, salesand marketing operations to its own site in Kent. It will re-locate themanufacturing and assembly processes to third parties. This will allow Hornby tofocus on re-invigorating the marketing and distribution and driving salesgrowth. Airfix and Humbrol remain strong brands and enjoy an excellent position in themarket place. Demand has remained buoyant in recent years. Humbrol products areused by modellers across a large range of applications worldwide. Hornbymanagement believe that they can re-invigorate the Airfix business by focussingboth on traditional products for the model enthusiast and also by investing innew products aimed at the younger market. The market for Humbrol's paint and model accessories products is very broad.Humbrol sells a successful range of products that consists of enamel paints,aerosols and adhesives in a large number of markets including Europe and the US. Humbrol's products are used in a multitude of applications, not just modelmaking. This will broaden Hornby's product offering which currently ranges frommodel railways, slot car racing sets, track extensions, buildings and landscapeaccessories. The consideration will be financed out of Hornby's existing bank resources. Thetransaction is expected to be earnings neutral in the current financial year andsignificantly enhancing thereafter. Frank Martin, Chief Executive of Hornby commented, " We are delighted to have acquired Airfix and Humbrol, both of which are iconicbrands in the hobby market. The strategic fit with Hornby is excellent. Hornbyhas similar distribution channels to Humbrol/Airfix, and we therefore plan tointegrate the business into our existing structure, which gives the business theright platform and a more streamlined base from which to grow. " We have taken steps to re-align the cost base of the manufacturing andassembly process, to create a solid base from which this business can thrive. Wecan focus on product innovation, improving the marketing and driving salesgrowth. " Hornby has the expertise and track record of re-invigorating hobby brands. Adetailed integration plan has already been put in place, to ensure that weimprove the profit performance rapidly. " This acquisition consolidates the Group's strategy to build an internationalhobby business with a broad range of brands, allied to a tightly controlledcost-base. We are making good progress across a range of markets andterritories." Keith Hinds, joint Administrator at Grant Thornton said: " I am delighted to be able to announce this successful sale. This transactionprovides the best opportunity to preserve and develop what is an iconic brand." -ends- Note to editors: Humbrol Limited went into Administration in August 2006 following the problemsexperienced by its major manufacturing supplier Heller SA in France, which wentinto administration in July 2006. Date: 10 November 2006For further information contact: Hornby Plc cityPROFILEFrank Martin, Chief Executive Simon CourtenayJohn Stansfield, Finance Director William AttwellTel: 01843-233500 Tel: 020-7448-3244On 10 November - Tel: 020-7448-3244Web: www.hornby.com or: www.scalextric.com This information is provided by RNS The company news service from the London Stock Exchange