Mothercare buys toy firm for £85m

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Babycare retailer Mothercare has agreed to buy the Early Learning Centre (ELC) children's toy chain for £85m.

Mothercare is paying ELC's owner, Chelsea Store Holdings, £49m in shares and taking on the company's £36m debts.

The combined group will have 435 UK stores and 420 franchised outlets around the world.

Mothercare said it would now "explore the opportunity to open additional international stores and extend the global reach of both brands".

It added that it would also be looking to make savings from the combined group's UK store portfolio - Mothercare currently has 225 UK outlets to ELC's 210 - but gave no details of any potential branch closures.

Mothercare also said that it would use its increased size to boost profit margins by driving a harder bargain from suppliers.

'Time is right'

Chelsea Store Holdings is owned by a consortium of Waterstone's founder Tim Waterstone, US private equity firm Rhone Capital and publisher DC Thomson.

Mothercare has recently turned around its fortunes after a three-year recovery plan that followed losses of £24.8m in 2003.

"Having completed Mothercare's turnaround and put strong foundations in place to grow the business, the time is right to make this step," said Mothercare's chief executive Ben Gordon.