By Aaron Waldron
From The News-Gazette:
Published Sat, 03/24/2018 - 7:00am
By Ben Zigterman
Photo by: Robin Scholz/The News-Gazette
Cars are reflected in the windows at Hobbico in Champaign on Wednesday, Jan. 10, 2018.
Full article available here: www.news-gazette.com/news/local/2018-03-24/horizon-hobby-agrees-make-188m-bid-hobbico-units.html
CHAMPAIGN — Hobby-product distributor Hobbico has found a buyer for its remote-control business: cross-town competitor Horizon Hobby.
Horizon Hobby has agreed to buy several units of Hobbico for a combined $18.8 million, subject to an auction scheduled for Wednesday.
"We believe this transaction, if completed, will further strengthen Horizon's position as the market-leader in the RC industry," Horizon Hobby President and CEO Joe Ambrose said in a statement. "Horizon and Hobbico have served many of the same retailers and customers for years. Upon completion of this transaction, Horizon will work to provide a smooth transition within the industry."
Hobbico filed for Chapter 11 bankruptcy protection in January with the goal of finding a buyer.
"Acquiring and incorporating Hobbico's RC business with Horizon allows us to further strengthen our organization so that we are well-positioned to grow and meet the future needs of retailers and customers," Ambrose said. "It is unfortunate that Hobbico's financial position forced it to seek bankruptcy protection, but this transaction will result in a strong organization with the resources to expand and prosper."
If completed, Horizon will be buying Hobbico's Great Planes and Tower Hobbies divisions, as well as brands including Axial and Arrma. Hobbico had been asking for at least $22 million for these companies.
The purchase won't include Estes, United Model, Revell US or Revell Germany.
Additionally, "Horizon will not be assuming any of Hobbico's debts or other liabilities in this transaction," Ambrose said.
Following the auction, where Horizon would be the stalking-horse bidder, the purchase would close April 6.
In separate court filings Friday, Hobbico said it had reached a $6 million stalking-horse purchase agreement with a corporation called Estes Industries LLC for its Denver-based Estes subsidiary.
The auction had originally been scheduled for this coming Monday in Chicago and was moved to Wednesday in Delaware.
The two-day delay is "just a matter of process efficiency, as there are certain filings that need to take place the day before (Tuesday) in Delaware, and this eliminates travel to Chicago for an auction the following day," said Howard Salazar, human resources director for Hobbico.
He was unable to comment on the purchase agreements.
With a stalking-horse bid, the potential purchasers essentially set the floor bid of the auction in exchange for certain protections.
For example, if Horizon Hobby isn't the successful bidder, it will receive a break-up fee of 3 percent of its base bid, or $540,000.
Both Hobbico and Horizon Hobby are among the top 25 employers in the county, according to the Champaign County Economic Development Corp.
Last year, Hobbico, one of the largest hobby product distributors in the country, said it had 415 employees in the county, and Horizon Hobby reported 341 employees.
Hobbico was formed in 1985, when Clint Atkins combined Don Anderson's Great Planes Model Distributors and Bruce Holecek's Tower Hobbies.
Horizon Hobby, founded in 1985 by Rick Stephens, was sold to an investment group in 2014. It has more than 700 employees around the world, including in California, France, Germany, the United Kingdom and China, according to its website.