If you have a young child smitten with Thomas the Tank Engine, odds are you've balked at the expensive wooden train sets.
With every new piece of track and die-cast character accessory, you shook your head... until it dawned on you -- it might be worth investing in the company. But, alas, Learning Curve was privately held -- like so many other companies we wish we could own.
Well, if you want to take Thomas for a ride, you're in luck. The train may pull into the public station soon. Racing Champions ERLT
Every company needs to be reevaluated after a merger, and Racing is no exception. However, the more you uncover about its track record and where the eventual merger is heading, the better Racing's stripes appear.
Last month, the company announced preliminary 2002 financial results. With sales growing in a difficult economic environment and bottom-line guidance implying earnings of at least $1.37 a share, is Racing really worth just 8 times trailing earnings? With last year's profits growing by 18% to 25%, and the company predicting earnings-per-share improvement by 6% to 12% this year, is the maker of miniature vehicles a worthy investment vehicle?
While the Learning Curve acquisition will transform the practically debt-free Racing Champions into one tapping a $140 million line of credit to close the deal, you have to like the synergy. The merger will open new distribution channels for both brands, considering Learning Curve's appeal with young boys and Racing's niche with the older set. Virtually every Barnes & Noble
One thing's for sure: This deal has got wheels.