By: Michael Lauzon
February 12, 2018
One of the iconic brands in the plastic construction toy market has changed hands.
K’Nex Brands’ assets have been acquired by Basic Fun, a Boca Raton, Fla., toy and novelty company with well known product lines, including Tech 4 Kids and Uncle Milton.
K’Nex was another example of collateral damage from the bankruptcy of major retailer Toys R Us.
“The Toys R Us bankruptcy affected K’Nex’s sales and led to an inability to obtain credit,” current K’Nex CEO Michael Araten told Plastics News in a phone interview.
“It was a cascade effect.”
Toys R Us declared bankruptcy in September. Even toy giants Mattel Inc. and Hasbro Inc. were not immune to its effects and last year began to see their sales and stock prices erode.
K’Nex was sold in a Jan. 29 auction, and the deal was finalized Feb. 6. Terms were not disclosed, but lender PNC Bank had previously disclosed in a legal notice that it had a $21 million offer for the company.
Basic Fun did not buy K’Nex’s liabilities. Local newspapers reported that the new owner is contacting K’Nex suppliers and vendors to continue to supply the company with parts and services.
According to the reports, a Cherry Hill, N.J., printing company filed a court complaint in December alleging that K’nex had refused to pay $90,530 in bills dating to August.
Basic Fun announced the deal Feb. 12 but it did not disclose terms. K’Nex fits Basic Fun’s science, technology, engineering, and math toys under various trade names as well as its up-to-now modest stake in construction toys, the company said in a news release.
K’Nex, founded in 1992, makes and markets construction sets based on interconnecting plastic girders and supports that can be assembled into a host of structures and figures. The company makes its toys in Hatfield, Pa., using injection molded components made by sister company Rodon Group LLC, a highly automated custom molder also based in Hatfield.
K’Nex construction toys were invented in 1991 by Joel Glickman, son of Irving Glickman, who co-founded Rodon in 1956. Rodon continues to be held by the Glickmans and related families. Araten is Joel Glickman’s son-in-law.
Rodon should not be negatively affected, according to Araten, who also is Rodon’s president and CEO. Rodon has a long-term agreement to supply molded parts to K’Nex under the new ownership. Araten said K’Nex represents less than15 percent of Rodon’s sales. K’Nex and Rodon run their operations in separate facilities a few miles apart in Hatfield.
“If anything, we expect our sales to K’Nex will go up over the years,” Araten said by phone.
“We expect Basic Fun will market K’Nex heavily.”
Rodon’s sales have been growing 12 to 15 percent a year over the past decade, Araten said. Plastics News’ data estimates Rodon’s sales last year were $35 million. It employs about 100 and runs about 117 injection presses with clamps from 46 to 400 tons. The company, and K’Nex, tout their Made-in-USA distinction. This stance helped the company land appearances by former President Barack Obama and presidential hopeful Hillary Clinton.
K’Nex’s sales could be boosted by sales to China. The company entered the Chinese market in 2013 by selling products online. Araten said he expects sales to continue in China. K’Nex toys have been distributed to some 40 countries, he estimated.
K’Nex’s product lines also include iconic brands such as Tinkertoy, Lincoln Logs and Super Mario.
Basic Fun’s 25-year run in the toy sector included consolidating several toy companies under one banner. It was acquired in 2013 by Bridge Direct, along with its owner, Good Stuff Corp.
Basic Fun’s offerings extend to electronic games like Pac-Man and Fisher-Price Classics.
“The K’Nex story is a great American toy story in every way — from its inception as a toy invention, to its unique manufacturing profile, to being recognized by consumers and the trade as a distinctive construction platform in one of the most challenging categories in the toy industry,” stated Basic Fun CEO Jay Foreman in a news release.
“Its time for us to connect this wonderful brand and its innovative product line with new owners whom we expect will take K’Nex to new heights over the next 25 years,” added K’Nex CEO Michael Araten.
Denmark’s Lego A/S building blocks dominate the construction toys market. Mattel Inc. joined the fast-growing category in 2014 when it bought the Mega Bloks building block business based in Montreal. At the time Mega Bloks occupied second place in the competitive category.