Character Group – an overseas venture

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Character Group (LSE:CCT) has recently spread its wings by buying a controlling stake in a company which operates a similar business model in Scandinavia.  This could be the start of a trend, where more European toy companies are purchased by Character being motivated by the potential of synergies in attracting brand owners by offering a larger retail customer base in many countries, the cross-selling of product lines and lower buying costs.

PROXY has exclusive distribution rights for the Nordic region for various toys including Fortnite figurines, Shopkins and Disney Doorable.  It has also been selling a number of Character brand products for years, e.g. ORB Odditeez, ORB Slimy and Soft ‘N Slo Squishes.

PROXY was founded in 2011 by Morten Geschwentner and Mikkel Kjaersgaard.   It now has 30 employees, annual revenues of €24m, and a presence in 5,000 retail stores and online shops.

In October 2018 Character bought 55% of PROXY for an initial consideration of £0.3m.  Another £3m will be paid in an earn-out, subject to EBIT targets being reached in 2019, 2020 and 2021. The payments will be partly in cash and partly in CCT shares.

Morten Geschwentner is CEO and retains 35% of PROXY’s shares. Mikkel Kjaersgaard is CFO and retains 10% of the shares. They have worked with Character’s managers for many years.

Reasons given for the purchase:

  1. To enable Character to extend its European reach
  2. Potentially frictionless access to EU market post-Brexit
  3. Provide a more………………To read more subscribe to my premium newsletter Deep Value Shares – click here


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