Mumbai: Reliance Retail, a subsidiary of India’s largest conglomerate, Reliance Industries Ltd (RIL), is in talks to acquire a controlling stake in iconic UK-based toymaker Hamleys, said two people aware of the matter, requesting anonymity.
Moneycontrol.com, which first reported the development on Wednesday, said that “due diligence for the deal is at an advanced stage" and “Reliance Retail is aggressively pursuing the deal".
Hamleys is currently owned by Chinese fashion conglomerate C Banner International, which had acquired it for £100 million in 2015. C Banner also owns the Chinese units of marquee consumer retail brands such as Steve Madden and Sundance.
It has been looking to cut its losses and sell off Hamleys after logging heavy losses, Sky News had reported last October.
If the deal goes through, it would cap the story of the 295-year old toymaker, which has struggled to generate profits in recent times.
Hamleys started with a single-store shop, Noah’s Ark, in 1760, around the time when the British East India Company was thriving in India.
“By the time Queen Victoria ascended the throne in 1837, Hamleys was already a London landmark... So successful was the shop that in 1881 a new branch opened in Regent Street (a popular London street)," shows the Hamleys’ website.
In 2003, Hamleys was delisted from the London stock market by Icelandic investment firm Baugur Group, which had paid $68.8 million for the company. In 2012, it was sold for $78.4 million to France’s Groupe Ludendo.
Hamleys reported losses of £12 million in 2017, when it last reported its financials.
Profits fell off the cliff by 500%, as its chief executive, Ralph Cunningham, blamed Brexit, macroeconomic factors and terrorist attacks for the company’s poor performance. However, he had also said that he expects Hamleys to return to net profitability in the following year.
Reliance Retail already has a pan-India franchise agreement with Hamleys to merchandise its famous toys. Hamleys has around 129 stores globally, a large majority of which are under the franchise model. Besides the UK, the company is present in China, Germany, Russia, India, South Africa and the Middle East, among other regions, the Moneycontrol report said.
Reliance Retail plans to increase the toymaker’s geographic footprint in India if the deal goes through.
A Reliance spokesperson said the company does not comment on “speculation and rumours".
“Our company evaluates various opportunities on an ongoing basis. We have made and will continue to make necessary disclosures in compliance with our obligations under Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 and our agreements with the stock exchanges," the spokesperson said.
Reliance Retail has entered into tie-ups with many other marque international brands such as Diesel, Marks and Spencers, Steve Madden and Kenneth Cole. It reported turnover of ₹69,198 crore for 2017-18. As on 31 December 2018, Reliance Retail operated 9,907 stores across over 6,400 cities with a retail area of over 21 million sq.ft.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.