Grand Toys International Limited (NDAQ: GRIN) shares more than
tripled today after the company agreed to purchase frisbee-maker Wham-O
for $35 million. The toy-maker will pay a cash consideration of $35
million, adjusted for the liabilities of Whom-O, and 100 percent of the
shares of its wholly-owned subsidiaries Hua Yang Holdings and Kord
Holdings. Grand Toys also said that it would divest the low margin,
non-core Hua Yang and Kord manufacturing businesses in order to fully
focus on developing the Wham-O brand.
The news comes after a plethora of problems for Grand Toys, who has
been struggling with both its own businesses as well as retaining its
Nasdaq listing. Shareholders are hoping that the acquisition will help
revitalize the company with names like Frisbee, Slip ‘n Slide, Hula
Hoop, Morey, Boogie boards, Snow Boogie,and BZ Pro Boards. Grand Toys
plans to obtain substantial growth by targeting international markets
and driving synergies with its International Playthings subsidiary in
the United States.
“The new Board of Directors of Grand Toys, which was assembled in
mid-2007, has been focusing on developing a new direction and strategy
for Grand Toys to give the company a platform for growth” comments
David Howell, CFO of Grand Toys. “We believe the acquisition of Wham-O
represents a transformational opportunity for Grand Toys and it will
become the key asset around which we will build our business. In
addition, the divestiture of the low margin, non- core Hua Yang and
Kord manufacturing businesses frees up significant working capital for
the company and allows us to reduce substantially our bank debt,
creating a much healthier balance sheet.”
So, what does this all mean for shareholders? Well, Grand Toys has
decided to take on some additional debt and divest its past businesses
in an effort to acquire brands that truly have substantial value as
they are recognized worldwide. Investors are hoping that this will be
enough to turn the company around and drive higher profits and
revenues. Combined, these factors make GRIN a stock worth watching!
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