The largest shareholder in model maker Hornby has made a takeover bid for the company, valuing it at £27.4 million.

Pheonix Asset Management Partners has been forced to offer all other shareholders at just over 32p a share after it bought a stake in the Sandwich-based business from New Pistoia Income Limited this morning.

The share sale by New Pistoia comes after it made a failed attempt to oust the company’s chairman Roger Canham earlier this year, saying it was unhappy at a “disastrous” last five years.

The deal took Phoenix’s shareholding above 55%. Companies are required to make a takeover offer if their shareholding rises above 30%.

Within hours of the bid, Hornby chairman Roger Canham announced he was quitting the firm with immediate effect.

He is also a director of Phoenix Asset Management Partners.

Phoenix said it “continues to support progress made by Hornby towards a profitable and cash generative state”.

If its takeover is successful, it said it “intends to increase its understanding of Hornby and its longer term strategy for delivering further earnings growth”.

It also said it wants to keep the company on the London Stock Exchange’s junior AIM market, rather than taking it private.

The offer came hours after toy company Hornby, which also owns Scalextric and Airfix, revealed its losses widened last year.

The Sandwich-based company increased underlying losses by 10% to £6.3 million in the year to the end of March and reported a 15% cut in revenues to £47.4 million, which it had expected.

It said the first stage of its turnaround plan had been completed, which included reducing the scale of the business and cutting stock by 29% as it streamlined its European operating model.

It wants to improve the performance of its Scalextric toy-car brand and grow its European and US businesses.

Last June, the company warned shareholders it could go out of business unless it could raise £8 million in new shares.

Its latest results show the company, which still has a visitor centre in Margate, reduced pre-tax losses by 30% to £9.5 million and has improved cashflow, with net cash of £1.5 million against net debt of £7.2 million last year.

“We have built a sound platform for growth over the last 18 months and we are now planning to deliver sustainable profit and net cash generation into the medium term..." - Steve Cooke, Hornby

A new “focus on profitable products” helped improve its gross profit margin to 40% in the second half of the year.

It received £3.3 million in proceeds from the sale of part of its site in Margate, selling some Spanish properties and restructuring the business.

Hornby chief executive Steve Cooke said: “Our results to March 2017 provide solid evidence of our delivery in phase one of our turnaround plan, notably in terms of cash flow performance and gross margin improvement during the year.

“We are determined to build on this progress as we move to the next phase of the turnaround plan.

“We have built a sound platform for growth over the last 18 months and we are now planning to deliver sustainable profit and net cash generation into the medium term.

“The current financial year has started positively and we are well placed to achieve the board’s expectations for the year.”