Hornby Plc ("Hornby"), the international models and collectables group, has announced that it has entered into contracts to acquire certain assets of Humbrol Limited in Administration (Humbrol), the owners of the Airfix model kits and Humbrol paints businesses. The acquisition encompasses the Airfix model kit business, the Humbrol paints and model accessories business, the Young Scientist business and their associated assets. These brands are sold in a range of territories worldwide and are highly complementary to Hornby’s existing brands. In the year to 31 December 2005 the acquired brands achieved sales of £6.5 million.

Hornby has exchanged contracts with the administrators and will pay total consideration of £2.6 million in cash on completion for the assets acquired from the Administrators Grant Thornton.

Hornby intends to re-structure the business, moving all the distribution, sales and marketing operations to its own site in Kent. It will re-locate the manufacturing and assembly processes to third parties. This will allow Hornby to focus on re-invigorating the marketing and distribution and driving sales growth.

Airfix and Humbrol remain strong brands and enjoy an excellent position in the market place. Demand has remained buoyant in recent years. Humbrol products are used by modellers across a large range of applications worldwide. Hornby management believe that they can re-invigorate the Airfix business by focussing both on traditional products for the model enthusiast and also by investing in new 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 model making. This will broaden Hornby’s product offering which currently ranges from model railways, slot car racing sets, track extensions, buildings and landscape accessories.
The consideration will be financed out of Hornby’s existing bank resources. The transaction is expected to be earnings neutral in the current financial year and significantly enhancing thereafter.

Frank Martin, Chief Executive of Hornby commented, "We are delighted to have acquired Airfix and Humbrol, both of which are iconic brands in the hobby market. The strategic fit with Hornby is excellent. Hornby has similar distribution channels to Humbrol/Airfix, and we therefore plan to integrate the business into our existing structure, which gives the business the right platform and a more streamlined base from which to grow."
"We have taken steps to re-align the cost base of the manufacturing and assembly process, to create a solid base from which this business can thrive. We can focus on product innovation, improving the marketing and driving sales growth." "Hornby has the expertise and track record of re-invigorating hobby brands. A detailed integration plan has already been put in place, to ensure that we improve the profit performance rapidly. “ This acquisition consolidates the Group’s strategy to build an international hobby business with a broad range of brands, allied to a tightly controlled cost-base. We are making good progress across a range of markets and territories."

Keith Hinds, joint Administrator at Grant Thornton said: "I am delighted to be able to announce this successful sale. This transaction provides the best opportunity to preserve and develop what is an iconic brand."