The Entertainer has acquired The Early Learning Centre from Mothercare.
ELC operates within 80 Mothercare stores in the UK, 400 stores internationally through franchise partners and online at www.elc.co.uk.
The acquisition also extends to ELC’s portfolio of well-known British toy brands, including Happyland, though Mothercare will retain around £6 million worth of current inventory to sell in the next few months.
In a statement, the nursery and pre-school retailer says it no longer has “the necessary capital, resources or scale in this category to continue to invest and develop the own brand ELC toys needed to maximise returns from this specialist brand".
Mothercare hopes the agreement will expand and strengthen "an improved toy retailing proposition" in its own stores through The Entertainer, as well as improved supply to ELC franchisees and partners overseas.
The deal is worth around £13.5 million for cash-strapped Mothercare, broken down into a series of payments through The Entertainer’s holding company TEAL Brands Limited. Mothercare says £6m will be delivered on completion of the deal, with a further payment of up to £5.5m for inventory due in the following months. A final payment of £2m comes in the form of an earn out fee. This is essentially a closing instalment contingent upon The Entertainer meeting or exceeding a set level of future earnings as a result of the purchase.
Mothercare, which is 10 months in to major refinancing, says it will use the income from the sale to make a significant dent in the group’s outstanding bank debt of around £17.5m.
"This disposal of Early Learning Centre provides a further step towards eliminating our bank debt, and our new concession arrangements with The Entertainer will bring our customers an even stronger toys offer, both in stores and online,” says Mothercare chief executive Mark Newton-Jones. “We look forward to working with the team at The Entertainer in the years to come.”
“We are delighted to add ELC to The Entertainer family,” says Gary Grant, Founder and Executive Chairman of The Entertainer. “It comes with a rich history as a much-loved British brand, supporting parents and grandparents with their children’s early years’ learning, development and play.
“We will look to bring new life to the product offering whilst maintaining the high level of quality ELC is renowned for. By combining our experience with that of ELC’s passionate and capable partners around the world we look forward to re-invigorating the brand for generations to come.”
The ELC purchase follows an exciting year of growth for The Entertainer, which saw 16 new stores open in the UK, 5 more internationally and the acquisition of Spanish toy retailer Poly, adding a further 57 stores to its portfolio.