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Hornby investors urged to reject reluctant Phoenix bid

Thomas the Tank train set maker Hornby has urged investors not to choo choo choose the takeover bid
Thomas the Tank train set maker Hornby has urged investors not to choo choo choose the takeover bid

Model trains maker Hornby on Monday insisted investors ignore a reluctant takeover bid from its majority owner Phoenix ahead of a bid deadline next month.

The board, led by temporary chairman David Adams, said the 32.375p bid “significantly undervalues” the Margate-based company, best known for its Thomas the Tank Engine toys and £200 miniature Virgin Train sets.

Phoenix wrote to investors laying out the mandatory cash offer on Friday after a 20.9% purchase of shares from activist investor New Pistoia Income fund took its stake over 55%.

That prompted the Takeover Panel to force Phoenix into a mandatory full cash bid.

Phoenix has maintained Hornby should remain listed on the junior stock market, a tacit admission that it does not want to buy the 45% of the company it does not already own.

The bid was also at a nil-premium to the share price, another sign it is a reluctant suitor. The shares were down 1p today, or 3%, to 32.50p.

Phoenix is chaired by Roger Canham, the former chair of Hornby who stepped down last week. Pistoia, the activist which sold its stake to Phoenix, had agitated for change at the group, including Canham’s removal.

Shareholders have until July 14 to accept the offer.

Hornby, led by chief executive Steve Cooke and advised by Numis, plans to write to shareholders laying out more details about its rejection.