Frank Martin, chief executive of Hornby, said that the two companies were a good fit and that he was excited about the potential growth Corgi could deliver.
He said he hoped that the acquisition will help the company to break out of its core market of adult male collectors in Britain and the US and move into younger and more international markets.
Hornby plans to become more relevant to a younger audience by making character licensing deals, in the same way it is expanding the appeal of its Hornby trains with Thomas the Tank Engine and Harry Potter licensing deals.
Hornby will take over Corgi's factories, plant and equipment, which like its own manufacturing, are all now based in the Far East.
Corgi's key marketing, sales and development staff will be retained but its sales administration, finance and operations departments will be integrated into Hornby's.
The first Corgi models appeared in 1956 and covered British-built saloon cars of the period including the Ford Consul, Austin Cambridge and Morris Cowley.
It had big hits in the 1960s with models such as James Bond's gold painted Aston Martin DB5 and the 1966 Batmobile. Other best sellers include the John Player Special Lotus Formula 1 racing car and the Ghia L 6.4.
The acquisition follows that in November 2006 of model kit maker Airfix and the Humbrol paints and model accessories business.
Hornby restructured the business following the purchase moving all the distribution, sales and marketing operations to its own site in Kent.
The acquisition marks a busy year for Hornby as it celebrates the 50th anniversary of its Scalextric brand with the launch of several products, fresh packaging and a revamped corporate identity.