SMOBY
Insolvency proceedings / Investors said to be interested / Berchet takeover pressures results
Several potential investors are said to have come forward to save French toy manufacturer Smoby (Lavans les Saint Claude; www.smoby.fr) from bankruptcy. The company, Europe´s second largest player after Lego, applied for protection against creditors on 20 March 2007. At the same time it revealed that it was looking for a strategic partner or, alternatively, financial investors to assume its debts. Under French law, it has six months to find a solution.
According to press reports citing the French industrial restructuring committee, Comité interministériel de restructuration industrielle, two strategic players, MGA Entertainment (Van Nuys, California / USA; www.mgae.com) and China´s Cornerstone Overseas Investment (Hong Kong) have expressed interest, as has Deutsche Bank, which already has acquired 45% of the toymaker´s total debt of around EUR 300m. The committee said both MGA and Cornerstone are offering EUR 60m for the company, which is currently estimated to be worth EUR 25m.
The Breuil family, majority shareholder of Smoby, with 53% of equity, is believed to be unwilling to accept the bank´s offer, as the creditors would surely require the resignation of CEO Jean Christophe Breuil. However, the family is said to be prepared to give up shares in exchange for debt cancellation and accept a minority shareholding.
Smoby evidently bit off more than it could chew with the May 2005 acquisition of its main competitor, Groupe Berchet (Oyonnax / France; www.groupe-berchet.com) – see Plasteurope.com Web of 16.06.2005. The company ended financial year 2005/2006 (31 March) in the red for the first time ever, with an operating loss of nearly EUR 26m. In the first half of 2006/2007, Smoby generated sales of around EUR 170m – an increase of EUR 22.5m on the same period of the previous year. However, the net loss carried forward widened from EUR 2.5m to nearly EUR 9m. At last count, the company had around 2,750 employees on the payroll, including 1,300 in France. Prior to filing for protection from creditors, it was said to be planning to cut 400 jobs.
Along with toy production, Smoby also has an industrial division (Mob), which produces blow-moulded small bottles and canisters for chemicals and cosmetics. This division also produce an operating loss – of just under EUR 1m – in 2005/2006 on sales of around EUR 29.3m.
Like Smoby, possible buyer Cornerstone, one of the largest Chinese companies in its field, produces large-format outdoor toys. In January 2006 it acquired US company Wham-O, touted as the inventor of many popular fad toys, including the hula hoop and the frisbee, from private equity group Charterhouse for a reported USD 80m. In the meantime, most of production has been relocated to Asia, with only marketing and distribution remaining in the US. This is a fate observers believe Smoby could face, too, in the event of a Chinese takeover.
e-Service:
Smoby half year report 2006/2007 (French) as PDF document (311 KB)
Smoby financial report 2005/2006 (French) as PDF document (2,120 KB)
According to press reports citing the French industrial restructuring committee, Comité interministériel de restructuration industrielle, two strategic players, MGA Entertainment (Van Nuys, California / USA; www.mgae.com) and China´s Cornerstone Overseas Investment (Hong Kong) have expressed interest, as has Deutsche Bank, which already has acquired 45% of the toymaker´s total debt of around EUR 300m. The committee said both MGA and Cornerstone are offering EUR 60m for the company, which is currently estimated to be worth EUR 25m.
The Breuil family, majority shareholder of Smoby, with 53% of equity, is believed to be unwilling to accept the bank´s offer, as the creditors would surely require the resignation of CEO Jean Christophe Breuil. However, the family is said to be prepared to give up shares in exchange for debt cancellation and accept a minority shareholding.
Smoby evidently bit off more than it could chew with the May 2005 acquisition of its main competitor, Groupe Berchet (Oyonnax / France; www.groupe-berchet.com) – see Plasteurope.com Web of 16.06.2005. The company ended financial year 2005/2006 (31 March) in the red for the first time ever, with an operating loss of nearly EUR 26m. In the first half of 2006/2007, Smoby generated sales of around EUR 170m – an increase of EUR 22.5m on the same period of the previous year. However, the net loss carried forward widened from EUR 2.5m to nearly EUR 9m. At last count, the company had around 2,750 employees on the payroll, including 1,300 in France. Prior to filing for protection from creditors, it was said to be planning to cut 400 jobs.
Along with toy production, Smoby also has an industrial division (Mob), which produces blow-moulded small bottles and canisters for chemicals and cosmetics. This division also produce an operating loss – of just under EUR 1m – in 2005/2006 on sales of around EUR 29.3m.
Like Smoby, possible buyer Cornerstone, one of the largest Chinese companies in its field, produces large-format outdoor toys. In January 2006 it acquired US company Wham-O, touted as the inventor of many popular fad toys, including the hula hoop and the frisbee, from private equity group Charterhouse for a reported USD 80m. In the meantime, most of production has been relocated to Asia, with only marketing and distribution remaining in the US. This is a fate observers believe Smoby could face, too, in the event of a Chinese takeover.
e-Service:
Smoby half year report 2006/2007 (French) as PDF document (311 KB)
Smoby financial report 2005/2006 (French) as PDF document (2,120 KB)
11.04.2007 Plasteurope.com [207830]
Published on 11.04.2007
German version of this article...