Any business is a good business if you can make profits, and Mukesh Ambani-led Reliance Industries is keeping this lesson well. The company is now going to acquire the 259-years old iconic British toy-maker Hamleys in an all-cash deal for Rs 620 crore.
The acquisition comes just when the Reliance group is in its last-leg preparations to launch its homegrown e-commerce business in India.
Apparently, Ambani’s flagship retailer – Reliance Retail – already has a pan-India franchise agreement with Hamleys toys. Its master franchise for Hamleys operates 88 stores across 29 cities at present.
The deal with Reliance Retail is Hamleys’ fourth change of ownership in 15 years.
Currently, Hamleys is owned by Chinese fashion conglomerate ‘C Banner International’. The Hong-Kong listed company acquired Hamleys for 100 million pounds in 2015. The same company also owns the Chinese operations of ace consumer brands like Steve Madden and Sundance.
Hamleys was delisted from the London Stock Exchange in 2003 when it was acquired by Icelandic investment firm Baugur Group. The deal was materialized for $68.8 million. It was further sold for $78.4 million to Groupe Ludendo of France in 2012.
On May 9 2019, Reliance Brands Ltd, a subsidiary of Reliance Industries, signed a definitive agreement with Hong-Kong’s C Banner International Holdings to acquire 100 per cent shares of Hamleys Global Holdings Ltd. All the international stakeholders have been unsuccessful in expanding the brand globally.
Reliance pipped many international players in acquiring the Hamleys business.
The front-runners eyeing Hamleys business included:
1. The Entertainer, the UK’s largest independent toy retailer run by founder Gary Grant. It acquired Poly, a chain of 55 toy shops in Spain, as well as the Early Learning Centre, which operates 80 Mothercare stores in the UK.
2. Mike Ashley, the founder of UK’s largest sports goods retailer Sports Direct.
3. The Irish toy shop chain Smyths.
Why is Reliance eyeing toy industry?
Well, there are no fewer children in the world than a year ago, and hence consumer demand for toys has been growing. Another traditional driver of the global toy industry – Hollywood, ill also deliver well in terms of box office in 2019. The year is set to see new instalments of Toy Story, The Lion King, Aladdin, Frozen and Star Wars. Such movies perform well at the box office and in toys.
Online PR and popular ‘unboxing’ channels have also revived the business model of toys by enhancing end user experience. Toys are now popular across all age groups and cultures.
The rising disposable incomes have also fuelled the demand for the toys globally.
The business for Hamleys revived in 2018. In 2018, it reported a profit after tax of 2.44 million pounds, against a loss of 11.24 million pounds in 2017.
Hamleys started a single-store shop – Noah’s Ark – in 1760. It has 167 stores across 18 countries.
Hamleys flagship store was opened on Regent Street in London in 1881. This seven-storey store covers 54,000 sq ft and has over 50,000 lines of toys on sale.
Receiving over 5 million visitors each year, it is a prominent tourist attraction in London.