Crown Crafts Acquires Manhattan Toy, a Leading Creator of Developmental Toys for Early Childhood
March 20 2023 - 6:44AM
Crown Crafts, Inc. (NASDAQ-CM: CRWS) (the “Company”) today
announced that it has acquired Manhattan Group, LLC, doing business
as Manhattan Toy, and its wholly owned subsidiary Manhattan Toy
Europe. The acquisition expands Crown Crafts’ presence in the
growing category of developmental toys for infants and toddlers.
Manhattan Toy’s product offerings of plush, dolls and wooden toys
will complement Crown Crafts’ existing line of Sassy toys.
“The developmental toy category represents a
tremendous growth opportunity as parents of young children turn
away from electronics and toward more physical toys that bring joy,
imagination and creativity to play,” said Olivia W. Elliott,
President and Chief Executive Officer of Crown Crafts. “Manhattan
Toy adds new and exciting products to our portfolio, expands our
customer base and opens up new distribution channels, including
international expansion. We are greatly impressed with Manhattan
Toy’s operations and its excellent design team, and welcome them to
the Crown Crafts team.”
“At Manhattan Toy, we have always been dedicated
to creating toys that promote a child’s cognitive, emotional and
social development, while recognizing that the most powerful thing
any of us play with in this life is our imagination,” said Nora
Quinlan O’Leary, President of Manhattan Group. “We are proud of our
reputation as a pioneer in the developmental toy category and all
that our talented team has accomplished. We are also pleased that
Crown Crafts shares our vision, and we are excited about the new
growth opportunities this acquisition will bring.”
The purchase price for the acquisition is $17
million and is subject to customary working capital adjustments.
The purchase was funded by a combination of cash on hand and
proceeds from the Company’s line of credit. The term of the line of
credit has been extended from July 2025 to July 2028 and its
borrowing capacity increased from $26 million to $35 million.
The acquisition is expected to be accretive to
earnings and will add approximately $24 million annually to the
Company’s net sales. Following the acquisition, the toy category
will become the largest product category within the Company’s
business, representing approximately 40% of overall net sales.
Manhattan Toy is based in Minneapolis,
Minnesota, with a distribution facility in Eden Valley, Minnesota,
and its European subsidiary is based in the United Kingdom. Crown
Crafts intends to continue operations at both offices and at the
distribution facility.
According to a report from Fortune Business
Insights, the global educational toy market was approximately $65
billion in 2020, including $25 billion in North America. Motor
skill toys represented the largest share of the global market,
which is forecast to grow at a near-double-digit rate through
2028.
“This acquisition is the latest step in our
long-term strategic plan, which includes expanding in the toy
category, expanding our product offerings both organically and
through acquisition, increasing our direct sales to consumers,
reducing operating costs, and making further investments to enhance
our technology and improve our organizational structure,” Elliott
said. “We will continue to pursue our strategy as we look for
additional opportunities for profitable growth.”
D.A. Davidson & Company acted as exclusive
financial advisor to Manhattan Toy on this transaction.
About Crown Crafts, Inc.
Crown Crafts, Inc. designs, markets and
distributes infant, toddler and juvenile consumer products. Founded
in 1957, Crown Crafts is one of America’s largest producers of
infant bedding, toddler bedding, bibs, toys and disposable
products. The Company operates through its two wholly owned
subsidiaries, NoJo Baby & Kids, Inc. and Sassy Baby, Inc.,
which market a variety of infant, toddler and juvenile products
under Company-owned trademarks, as well as licensed collections and
exclusive private label programs. Sales are made directly to
retailers such as mass merchants, large chain stores and juvenile
specialty stores. For more information, visit the Company’s website
at www.crowncrafts.com.
About Manhattan Toy Company
Manhattan Toy offers a wide variety of toys, dolls, plush products
and games designed to help young children learn through the
experience of play. Its award-winning portfolio includes more than
500 products ranging from wooden toys to activity centers and
books. More information about the company is available at
www.manhattantoy.com.
Forward-Looking Statements
The foregoing contains forward-looking
statements within the meaning of the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. Such statements are based upon
management’s current expectations, projections, estimates and
assumptions. Words such as “expects,” “believes,” “anticipates” and
variations of such words and similar expressions identify such
forward-looking statements. The forward-looking statements in this
press release do not constitute guarantees of future performance
and include, without limitation, statements regarding the
anticipated benefits of the Company’s acquisition of Manhattan Toy,
including expanded market presence, product offerings, customer
base, distribution channels and international business; the
anticipated market for developmental toys; expectations regarding
the acquisition’s impact on the Company’s growth opportunities,
earnings and net sales; the expectation that the acquisition
supports the objectives of the Company’s long-term strategic plan;
and the potential value and synergies that the acquisition may
provide to the Company’s customers, employees and stockholders.
Forward-looking statements involve known and
unknown risks and uncertainties that may cause future results to
differ materially from those suggested by the forward-looking
statements. These risks include, among others, the Company’s
ability to realize the potential benefits of its acquisition of
Manhattan Toy; potential disruptions to the operations of the
Company and Manhattan Toy, the distraction of management and other
risks related to the Company’s integration of Manhattan Toy’s
products, business and team; the Company’s ability to retain
Manhattan Toy’s key personnel; unexpected or increased charges,
expenses or costs resulting from the acquisition; potential adverse
reactions or changes to business relationships resulting from the
announcement and completion of the acquisition; general economic
conditions, including changes in interest rates, in the overall
level of consumer spending and in the price of oil, cotton and
other raw materials used in the Company’s products; changing
competition; changes in the retail environment; the Company’s
ability to successfully integrate any other businesses the Company
may acquire; the level and pricing of future orders from the
Company’s customers; the extent to which the Company’s business is
concentrated in a small number of customers; the Company’s
dependence upon third-party suppliers, including some located in
foreign countries; customer acceptance of both new designs and
newly-introduced product lines; actions of competitors that may
impact the Company’s business; disruptions to transportation
systems or shipping lanes used by the Company or its suppliers; and
the Company’s dependence upon licenses from third parties.
Reference is also made to the Company’s periodic filings with the
Securities and Exchange Commission for additional factors that may
impact the Company’s results of operations and financial condition.
The Company does not undertake to update the forward-looking
statements contained herein to conform to actual results or changes
in our expectations, whether as a result of new information, future
events or otherwise.
Contact: |
Investor Relations: |
|
|
Craig J. Demarest |
Three Part Advisors |
Vice President and Chief Financial Officer |
Steven Hooser, Partner, or |
(225) 647-9118 |
John Beisler, Senior Vice President |
cdemarest@crowncrafts.com |
(817) 310-8776 |
Crown Crafts (NASDAQ:CRWS)
Historical Stock Chart
From Jul 2024 to Aug 2024
Crown Crafts (NASDAQ:CRWS)
Historical Stock Chart
From Aug 2023 to Aug 2024