Hornby’s annual revenue is expected to increase by 2 million pounds sterling after it adds Corgi racing cars to its model train collection and Scalextric racing car.
The Frasers Group, owned by Mike Ashley, increased its investment in Hornby from 8.9% to 8.9% in less than a week. This made it the third largest shareholder of the group.
Hornby, the model maker in Margate, Kent has acquired Corgi’s assets, intellectual property and trade from Blue 14, a vehicle for investment owned by Jim Lewcock (51), an entrepreneur.
Both companies had long-standing relationships. In 2021, Corgi became a third party partnership with Hornby in order to create and sell modern editions of classic Corgi model from the archives using a subscription-based monthly model.
Hornby will finance the purchase by purchasing £400,000 in existing stock directly from Corgi. This stock will then be sold to Hornby’s customers. A further sum of approximately £200,000 is also being paid.
Hornby said that the deal will add £2million in revenue with a margin of 15%, and bring more than 6,000 “diehard” subscribers.
Corgi is a joint venture between Hornby and Corgi to produce and sell modern editions of classic Corgi model
Guy Stainthorpe (57), co-founder of Blue 14 and director, will be appointed as brand managing director for Corgi. He could receive an additional earnings based on Corgi’s profitability in the next three-year period.
Olly Raeburn (53), Hornby’s Chief Executive, said that bringing the Corgi Model Club into Hornby makes perfect sense. We anticipate driving growth domestically and globally over the next months and years.
Stainthorpe stated: “Galvanising the long-term Hornby partnership in this manner is a hugely beneficial development for Corgi Model Club, and gives us a fantastic chance to further develop our successful and growing business.”
Frasers purchased an additional 11.1 million Hornby shares from Artemis Investment Management last month. It held around four million shares.
Hornby, who counts Rod Stewart as one of its celebrity fans, has its roots in Liverpool in 1901, when Frank Hornby obtained a patent for the Meccano building toy. Model trains were first introduced by Hornby in 1920.
Hornby shares, which have doubled in value since January, rose a further 7.5%, or 2 1/2p to close at 36p.