Mike Ashley’s Frasers Group has taken a step further in expanding his retail empire by significantly increasing its stake in Hornby.
Shares in the Aim-listed seller of model trains and racing cars jumped by 33 per cent, or 7p, to 28p, their highest level in nearly six months, after it was disclosed that Frasers had acquired 11.1 million shares in the company, taking its stake to 8.9 per cent.
The stake-building means that Frasers, the owner of Sports Direct, is now the third largest shareholder in Hornby, behind Phoenix Asset Management, which has a majority stake of 73.4 per cent, and Artemis Investment Management, which sold a large chunk of its shares to Frasers. According to regulatory filings, Artemis now holds a 9.7 per cent stake. Prior to that it had a 16.2 per cent stake.
Hornby, whose toys have been a feature of British homes for decades, already sells its products in Game, the video games retailer owned by Frasers Group. The company was founded by Frank Hornby, who patented Meccano construction toys and went on to create his first clockwork train in 1920. It generated £23.8 million in revenues in the six months to the end of September and made a pre-tax loss of £5.1 million.
Olly Raeburn, 53, chief executive of Hornby, said: “Frasers Group has built a powerful ecosystem through its brand partners, scaled shared services and distribution channels. We have long admired their approach to merchandising and logistics and welcome them as supportive shareholders.”
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Chris Wootton, 54, Frasers Group’s chief financial officer, said: “Hornby’s portfolio of unique heritage brands are already part of Game’s product offer and we look forward to exploring opportunities to further leverage our scale in retail logistics and distribution. This is consistent with our strategy of pursuing strategic interests to enhance value for all stakeholders.”
The spending spree at Frasers has gained momentum in recent months, with the FTSE 100 group, which owns House of Fraser, Jack Wills and Flannels, steadily increasing its stakes in a number of retailers. It owns a 25.3 per cent stake in Asos, the online fashion seller, and this month increased its holding in Boohoo, the rival fast-fashion brand, to 22.1 per cent. Some in the City have been speculating that it is betting on a revival in the fortunes of online retail. At the end of last year Frasers continued its push into the luxury retail sector with a £52 million purchase of Matches Fashion.
Since last year it also has been building up shares in Currys, which has been at the centre of takeover interest this week after it emerged that Elliott Advisors, the American buyout group, had put forward a 62p-a-share bid for the electricals group. China’s JD.com, of China, is also considering a bid. In addition, Frasers has amassed a 24.7 per cent stake in AO World, the electricals chain.
Frasers has been expanding into the world of retail property over the past year, too, buying the Mall shopping centre in Luton and the Overgate Centre in Dundee last year. This month it was revealed that the company was considering a bid for the Meadowhall shopping centre in Sheffield, which has a reported asking price of £750 million.
Shares in Frasers Group edged up by 2p, or 0.2 per cent, to 834p.
