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Phoenix proposes to buy rest of Hornby after raising stake
June 21, 2017 / 8:21 PM / 6 months ago

Phoenix proposes to buy rest of Hornby after raising stake

(Reuters) - Phoenix Asset Management on Wednesday it would become the majority shareholder in Hornby Plc (HRN.L) and offered to buy the rest of the company, less than three months after thwarting efforts to oust the British toymaker’s chairman.

The investment manager said it agreed to buy 17.6 million shares of Hornby from New Pistoia Income Ltd (NPIL), which in April had called for a meeting to remove the company’s Chairman Roger Canham amid falling sales and multiple profit warnings.

Phoenix, Hornby’s largest shareholder, struck a deal with smaller stakeholders Ruffer LLP and Downing LLP to vote against NPIL’s proposal. NPIL is Hornby’s second-largest investor.

Canham, who has been in the post since February 2013 and is also the chairman of Phoenix, on Wednesday said he resigned from the Hornby board with immediate effect.

Phoenix said it offered to buy Hornby shares from NPIL at 32.375 pence per share. The acquisition will take the fund’s holding in Hornby to about 55.2 percent.

Following the acquisition, Phoenix UK, as required by British takeover laws, made a cash offer for Hornby at 32.375 pence per share, valuing the toy train maker at 27.4 million pounds ($34.71 million).

Hornby’s shares closed up 3.6 percent at 32.38 pence on Wednesday.

The company, which is trying to turn around its business, said its board acknowledged the offer and advised its shareholders to take no action for now.

Hornby said in 2016 it would decrease its product lines by 40 percent and exit a majority of its concession agreements in UK to boost its gross margins.

In its earnings statement released on Wednesday, Hornby said its gross margin for the 11 weeks to June 18 rose 5 percentage points from a year earlier.

Full-year revenue declined 15 percent to 47.4 million pounds, the company said.

Reporting by Ismail Shakil in Bengaluru; Editing by Sriraj Kalluvila

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