Model Train Maker Hornby Goes Private to Accelerate Turnaround Strategy
Hornby, the iconic model train and toy manufacturer, has announced plans to delist from London’s Alternative Investment Market (AIM), citing the need for greater flexibility in decision-making as it struggles to revive its business.
The decision comes after a sharp 60% decline in Hornby’s share price over the past year, making public market participation increasingly challenging. The company believes going private will allow it to execute its restructuring strategy more effectively, without the burdens of public listing regulations.
The move also follows the appointment of retail tycoon Mike Ashley—the founder of Sports Direct and Frasers Group—as an adviser to help improve Hornby’s financial performance. Ashley, who owns an 8.9% stake in Hornby, has built a reputation for acquiring struggling businesses and turning them around.
Why Hornby Is Exiting the London Stock Exchange
Hornby’s departure from AIM is part of a larger trend of UK companies moving away from public markets due to increasing regulatory costs and declining investor interest.
Key Reasons for Delisting:
🔹 Operational Flexibility – The company wants to pursue its turnaround strategy at a faster pace, without the regulatory hurdles and shareholder scrutiny of a publicly listed company.
🔹 Cost Savings – Complying with stock market regulations demands significant management time and resources. By going private, Hornby can cut costs and focus on core business operations.
🔹 Declining Market Value – With its share price down over 60% in the past year, Hornby has struggled to generate investor confidence.
🔹 Mike Ashley’s Influence – Ashley, who holds stakes in companies like Boohoo, Currys, and Evans Cycles, has a track record of reviving struggling businesses. His involvement suggests a more aggressive restructuring plan for Hornby.
Hornby’s Challenges: From Pandemic Boom to Market Struggles
Hornby has a long and storied history, dating back to 1901 when it was founded by Liverpudlian toy inventor Frank Hornby. The company gained global recognition for its model railways, Scalextric slot cars, and Airfix model kits.
Pandemic Boost and Post-COVID Decline
During the COVID-19 pandemic, Hornby saw a surge in demand, as homebound consumers turned to hobbies like model train collecting and DIY kits. However, this boom proved short-lived, and the company has since struggled with:
📉 Falling Consumer Demand – Post-pandemic, sales declined as consumers shifted spending back to travel, dining, and entertainment.
💰 High Product Prices – Hornby’s products, with some toy locomotives priced at £550 each, have faced pricing resistance from cost-conscious consumers.
🏭 Restructuring Costs – In an effort to cut costs, Hornby has laid off employees at its Margate, Kent headquarters and reduced headcount.
📡 Modernization Efforts – The company has attempted to attract younger customers by introducing Bluetooth-controlled trains, but adoption has been slow.
London’s Stock Market Exodus: A Growing Concern
Hornby’s decision to delist is part of a broader trend of UK companies abandoning London’s AIM and main stock exchange in favor of private ownership or international listings.
Recent UK Companies Leaving the London Stock Exchange:
- Flutter Entertainment (Paddy Power Owner) – Shifted its primary listing to New York.
- CRH (Construction Giant) – Moved its listing to the U.S., citing better market valuations.
- Superdry (Fashion Retailer) – Delisted to restructure away from public market pressures.
- Shell (Energy Giant) – Has hinted at a potential move to New York.
The London stock market has struggled to attract IPOs in recent years, with analysts warning that high regulatory costs and low valuations are making the UK a less attractive destination for public companies.
What’s Next for Hornby?
Hornby’s delisting will likely allow the company to move forward with aggressive cost-cutting and restructuring plans under the influence of Mike Ashley.
🔹 Increased Private Investment? – With Ashley already holding an 8.9% stake, some analysts speculate that he could increase his investment or even attempt a full takeover of the company.
🔹 New Retail Strategies – Ashley’s expertise in mass-market retail could push Hornby towards expanding its online presence and distribution networks.
🔹 Product Innovation – Hornby may double down on technology-driven models, such as app-controlled and smart trains, to appeal to younger generations.
🔹 Potential Asset Sales – Some non-core assets, such as Airfix or Corgi, could be sold off to streamline operations.
While Hornby’s brand remains strong, its ability to successfully navigate this transition will depend on cost management, product innovation, and effective leadership.
Investor Takeaways: Should You Be Concerned?
For current shareholders, Hornby’s delisting means:
- 🛑 Shares will no longer be traded on the AIM market, making liquidity a concern.
- ⚠️ Investors may have to sell shares through private transactions, which can be less transparent.
- 🔄 The company could eventually return to public markets if its turnaround strategy succeeds.
For the broader UK market, Hornby’s exit is yet another warning sign that London’s stock market is losing appeal, especially compared to New York’s higher valuations and investor appetite.
As the company transitions into a private entity, all eyes will be on Mike Ashley’s role in Hornby’s next chapter.
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