RC2, which changed its name from Racing Champions Ertl in early 2003, purchased Polar Lights' parent company, Playing Mantis, in June.
Indiana-based Playing Mantis is best known for its Johnny Lightning line of die-cast vehicles and Polar Lights plastic kits. Net 2003 sales for the privately held company totaled $28.5 million according to an RC2 press release. The purchase price was $17 million plus $2.5 million in common-stock shares and possibly as much as $4 million in cash based on meeting net sales targets for 2004 and 2005.
Playing Mantis was founded by Tom Lowe in 1994. Lowe, company president and sole shareholder, was to recieve all stock in addition to remaining with RC2 as an executive officer. With the change, Playing Mantis will focus on product developent and licensing. Rc2 will assume back-room operations, shipping, and accounting at its Dyersville, Iowa, facility, said Pete Henseler, R2C president.
The sale had an immediate effect on Playing Mantis. A few of its 50 employees were let go immeditately, and Lowe expected that to drop to 15 within 90 days
"The environment has changed in the last 10 years since I started," Lowe said of his decision to sell. "It's a dog-eat-dog world. there has been a consolidation of retailers, rising prices, you have a lot of mass merchandisers that are in major hurt."
"I saw the need. If I'm going grow this company, I'm going to have to merge with a larger company that has greater access to capital and larger distribution channels."
He says hobby retailers shouldn't see much difference in Playing Mantis.
Dealers should expect big things in the Johnny Lightning line, Lowe says.
"[RC2 is] commited to growing Johnny Lightning and Polar Lights. They saw great brand names and quality and fan base and they want to grow it."
Will the company eventually move to the Chicago area? "I hope not," Lowe says. "I don't see any reason for us to move. We will be in this building for another year. I will probably sell this building and then move to a smaller building."
In addition to the Playing Mantis purchase, RC2 recently bought The First Years, which makes products for toddlers.
RC2 plans to break ground for a 400,000-square-foot distribution facility in nearby Rochelle, Ill. The facility, which will create 42 new jobs, will be located next to Union Pacific's Global III Intermodal Facility, which the company says will reduce its shipping costs and improve efficiency.
"[Distribution] should be larger now," Lowe added. "We sold our products to mass and hobby stores and that kind of thing. But with their extensive distribution, you should see more Playing Mantis products out in the marketplace."
RC2 also consolidation offices in Chicago and Bolingbrook into its new Oak Brook headquarters.
-- Gregg Voss