Hornby sells Oxford Diecast back to founder for under half-price

Hornby has sold a model car manufacturing business back to its former chief executive for less than half what it paid for it only a few years ago.
The toymaker, behind popular brands such as Scalextric and Airfix, confirmed on Tuesday that it has sold Oxford Diecast, which makes model cars, planes and trains, back to Lyndon Davies and his family for £1.38 million.
Most of that is in cash, although £280,000 is from Davies selling his Hornby shares back to the company for £1.
The sale price is much less than Hornby bosses had recently estimated Oxford Diecast to be worth. At the end of September, the business had a book value of £2.99 million.
One of Davies’ first actions when he was brought in as Hornby’s chief executive in 2017 was to buy a 49 per cent stake in Oxford Diecast, which he founded in 1993, for £1.6 million.
In 2021, Hornby bought the remaining 51 per cent stake still owned by Davies for £1.3 million, taking the total outlay to £2.9 million.
That it has now sold the business back to him for less than half that amount may raise eyebrows among shareholders, including Mike Ashley, whose Frasers Group bought a 9.1 per cent stake in Hornby earlier this year. Shareholders will vote on the deal at the end of this month.
When he stepped down as chief executive in 2022, Davies, 63, became Hornby’s chairman. He resigned from that post earlier this year citing “personal, health-related, reasons” but stayed on as a non-executive director. If shareholders approve the Oxford Diecast deal, he will leave Hornby altogether.
Hornby said that by getting rid of Oxford Diecast its profitability should improve and reduce future capital expenditure requirements.
Before it was acquired by Hornby, Oxford Diecast was “historically a profitable business” but it has been loss-making in recent years, the company said. Hornby, which is itself trying to return to profit, fell to a pre-tax loss of £5.9 million last year, about £200,000 of which stemmed from losses at Oxford Diecast.
Hornby bought Corgi, another maker of diecast vehicles, earlier this year. It said that selling Oxford Diecast would “reduce operational complexity” and allow the group to “focus exclusively on Corgi” in the collectable diecast market.
“Hornby and its family of brands remains world renowned, and rationalising our portfolio in this way presents a more coherent offering to our customers,” Neil Sachdev, chairman of Hornby, said. “Through consistently adapting to change we will ensure that we are best placed to continue to support our existing customers whilst we create a new generation of hobbyists.”
Hornby shares rose by ½p or 2.8 per cent to 18½p on Tuesday, valuing the business at about £30 million.