Mothercare sells Early Learning Centre for £13.5m

Mergers & Acquisitions | Retail | South East

National retailer Mothercare has agreed to sell its Early Learning Centre (ELC) brand to the owner of children’s toy shop chain, The Entertainer for £13.5m.

TEAL Brands Limited will now complete the deal over the coming weeks.

Out of the £13.5m total, £6m will be received on completion of the sale, with up to £5.5m in respect of inventory due within a few months of completion. A further £2m earn-out fees will be distributed over the next two years.

The timing of the disposal, ten months after the refinancing, allows struggling Mothercare to accelerate the reduction of its bank debt providing the financial flexibility and resources to support our core strategic initiatives.

Whilst Mothercare has a solid presence in the toy market through the ELC brand, the group has stated that it does not have the necessary capital, resources or scale in this category to continue to invest and develop ELC name.

Mark Newton-Jones, CEO of Mothercare commented: “We have made significant progress in recent months as we continue our strategic transformation to deliver a sustainable and profitable future for Mothercare.

“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. We look forward to working with the team at The Entertainer in the years to come. We will update further at our full year results in May.” 

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