Privet pips HMV owner in race for Thunderbirds toy-maker Vivid

(c) Sky News 2017: <a href="http://news.sky.com/story/privet-pips-hmv-owner-in-race-for-thunderbirds-toy-maker-vivid-10799860">Privet pips HMV owner in race for Thunderbirds toy-maker Vivid</a>
 

A private equity firm which targets struggling companies will this week triumph in a two-way battle for control of Britain's biggest toy-maker.

Sky News has learnt that Privet Capital and Hilco, which has transformed the fortunes of HMV, the entertainment retailer, tabled takeover bids for Vivid in the last few days.

Sources said on Sunday that Privet was close to securing a deal to buy Vivid Toy Group, which has licences to make Thunderbirds and Moshi Monsters toys, and could announce a takeover as soon as Monday.

They added that any transaction would be through a solvent sale process, and would not require an insolvency mechanism such as a pre-pack administration.

Vivid is backed by the investment firm Phoenix Equity Partners, and has seen a slump in profits after a big bet on a new Thunderbirds range turned sour.

Last month, it asked KPMG's accelerated mergers and acquisitions team to identify new investors following an earlier sale process which failed to produce a buyer.

The expected sale will come weeks after a privacy storm erupted in Germany over a talking doll called Cayla which is distributed by Vivid.

The toy's smart technology can reveal personal data to hackers, prompting warnings by an official watchdog over its use by children.

A company source insisted that Thunderbirds had had "a successful launch year in 2015 and continues to be an important brand in the Vivid portfolio".

Vivid is Britain's biggest toy company and, according to its website, is the 20th largest in the world.

It was set up in 1993, since when it has made action figures from films and television programmes such as Toy Story, Spiderman and Star Trek, as well as products aimed at pre-school children themed on Winnie the Pooh and Rosie & Jim.

Surrey-based Vivid sells to 60 countries around the world and supplies retailers including Argos, Tesco (Frankfurt: 852647 - news) , Wal-Mart and Amazon.

"This is a profitable business with annual revenue of approximately £83m and positive EBITDA (earnings before interest, tax, depreciation and amortisation)," a source said.

Phoenix, which has owned a stake in Vivid since 2002, declined to comment.

The private equity firm's fund originated in 2001 and is now approaching the end of its life, which is among the reasons it is seeking a replacement shareholder, a source said.

Privet Capital specialises in operational turnarounds of companies, with its most prominent employee the former Serco chief executive, Chris Hyman.

Both Privet and Hilco also declined to comment.

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