Hornby says £27.4m takeover bid 'significantly undervalues' firm
Model toymaker Hornby has said that a takeover bid launched by Phoenix Asset Management "significantly undervalues" the company.
Phoenix said on Wednesday that it had commenced a mandatory takeover offer for the troubled firm, valuing it at £27.4 million, after picking up a majority stake.
But Hornby said the offer, made at 32.375p per share, "significantly undervalues" it and its future prospects.
The Scalextric-to-Airfix firm added that it will write to shareholders with a formal response to the offer, but strongly advised investors to take "no action for the time being".
The investment fund agreed on Wednesday to buy 17.6 million Hornby shares from New Pistoia Income, giving it a 55.2% holding in the company.
This, in turn, triggered a mandatory offer for the remaining shares.
Phoenix said that following completion of the offer, it intends to "increase its understanding of Hornby and its longer-term strategy for delivering further earnings growth following the completion of its turnaround strategy, by entering into further discussions with its management and the board of Hornby".
However, Phoenix said that Hornby will retain its listing on AIM, the London Stock Exchange's junior market, as it allows it to benefit from access to capital and increased profile.
Hornby also announced the appointment of David Adams as Interim chairman following Roger Canham's resignation.
New Pistoia had been pressurising the group to replace Mr Canham, and recently said the company's current strategy is "ineffective", "will continue to destroy value" and is "not aligned with creating wealth for all shareholders".
According to Phoenix's website, it specialises in "buying great businesses when they are cheap usually because they are having short-term issues".
Hornby, best known for its model railways, has embarked on a painful turnaround which has seen it reduce product ranges and cut back on investment as part of plans to shore up the balance sheet.
Hornby shares nudged up 0.4% to 32.5p in afternoon trading.