Cathay Capital North America has completed a recapitalization of K’Nex Brands and has invested in K’NEX’s new holding company, Smart Brands International Co.
Cathay Capital’s recapitalization of the company was completed with Michael Araten, CEO and son-in-law of one of the co-Founders, who brings almost a decade of experience running the family business. Along with the senior management of K’NEX, the next generation of the founding family will continue to have significant ownership in K’NEXs new holding company, Smart Brands International Co., which was formed to acquire the interests of K’NEX and build the business globally. Smart Brands will also seek to make complementary acquisitions in North America, Asia, and Europe, primarily within the construction and educational products space.Â
The new partnership between Cathay and the K’NEX team was forged by Jerry Welch, former CEO of F.A.O. Schwarz, and John Lee, from Babini Partners LLC. The transaction was structured to make K’NEX a global company and to assist the founding family with a successful generational transition plan. Cathay has provided capital to the business and access to its global network for distributing K’Nex in Canada, Europe, and other parts of the world. Cathay also has experience in the toy and educational products industry with affiliate investments in Juratoys (France) and Kidsland (China).
Founded in 1992 in Hatfield, Penn. by Joel and Bob Glickman, K’NEX is a company in the construction products sub-segment with several hundred patents related to collections for kids, ranging from toddles through young adults. K’Nex building sets of colorful rods, connectors, and bricks can be designed into trucks, robots, roller coasters, and more. The company also offers a line of products to encourage learning, including Mighty Makers and K’NEX Education Building Sets. Additionally, under license from Hasbro, K’NEX develops and distributes Tinkertoy and Lincoln Logs building sets.
K’NEX distributes its line through retailers such as Amazon, Toys “R” Us, and Target, as well as other specialty retailers and more.
