DE, Göppingen - Märklin -
Marklin faces a financial crisis? - Yes it does, and the creditors have sold the debt to Kingsbridge.
2005 was not what one would call a super year in respect to sales in the model train world. Particularly in Europe where it seems that modern technology is eating away at the customer base. Many times one hears that computer and video games detract the new generation from "old" hobbies. Unfortunate, but true, this comes along witha long term downturn in the economical side of Europe as well. People just don't spend when things are tight.
Marklin, one of the largest and best known brands in the model train industry now has had to bow to horrible economics as well as some internal battles that just didn't help the company. Rumours flourished that it was so bad the Marklin operations or manufacturing only was active when tours came through. Otherwise those same "workers" would be the same people that do the administrative work behind a desk.
The facts are that the 22 family member owned company was digging deeper into debt than what the banks felt comfortable with. Add the bad economy, and voila - fire sale. Although it seems it took a bit of force to convince 3 of the 22 family members, it finally happened. Enter Kingsbridge Capital Advisors.
Kingsbridge is acquiring the company with the following method:
- EUR 30 million total for Marklin
- EUR 13 million in cash
- EUR 2 million blocked for unforseen events (rainy day)
- EUR 15 million after 3-7 years depending on when Kingsbrdige sells the company again and outright or to another investor.
So comes the end of an era. But make no mistake about it, Marklin will survive, just under new management and ownership. Speculation has it that this will benefit in many ways. Marklin has already lossed a wide range of loyalty over the years as their collectibles or limited editions were not so collectible after a re-release a few years later. Export seems to be another blow. After dropping 1% from 2003 to 2004, and at the same time having a drop of total sales in the range of almost 10% in the same time, the reprecussions were large. Marklin USA has always been considered "that American branch" in the eyes of headquarters. Perhaps a little more tenacity on the company's part may have done a bit more for "that American branch".
It will be interesting to see what impact this will have on the industry as a whole. The last year debacle with ROCO already is showing its teeth by pricing the product line more aggressively. Perhaps this will also happen to Marklin if it is to survive. We can only guess.
