Mothercare in £85m deal for Early Learning Centre

CHILDREN'S retailer Mothercare today confirmed it would buy out the owner of the Early Learning Centre (ELC) in a deal worth £85 million.

The toy chain, owned by Chelsea Stores Holdings (CSH), is to be incorporated into Mothercare's out-of-town store portfolio, while its 210 high street stores will continue to trade as a stand-alone business.

The move is the largest acquisition by Mothercare since chief executive Ben Gordon joined the group in 2002 when it was on the brink of collapse. It is understood ELC concessions will open in 73 of Mothercare's out-of-town shops by Christmas and if successful, will be rolled out across the portfolio next year.

Mr Gordon said: "The proposed acquisition creates exciting opportunities for Mothercare's UK and international multi-channel businesses, enables significant synergy benefits and will be earnings enhancing in the first full financial year."

Tim Waterstone, founder of the Waterstone's book shop chain and owner of 13 per cent of CSH, will net just 1.5 million from the sale of CSH - due to the firm's 36m debt and a 35 per cent stake held by Scottish publisher DC Thomson - and a further share owned by private equity house Rhone Capital.

ELC was bought from Edinburgh-based John Menzies by venture capital group 3i for 20m in 2001.

CSH's Daisy & Tom brand, which currently has three stores in the UK, is to be retained by one of CSH's current shareholders.