Cinven ends interest in struggling Mothercare
The private equity firm Cinven has ended its interest in a potential bid for Mothercare, the struggling maternity product retailer. Its decision to walk away leaves Mothercare forced to deliver a turnaround in the full glare of the public markets for the foreseeable future.
Cinven never approached the retailer with an offer, but the day after reports of its interest in December, Mothercare's shares jumped 4.6 per cent. Both companies declined to comment.
While Mothercare has continued to grow sales and expand rapidly to more than 1,000 shops overseas, it has endured a torrid time in the UK recently. The retailer made a loss of £81.4m in the 28 weeks to 8 October, and it plans to close 111 loss-making UK town centre stores by March 2013, leaving it with 266 shops.
Mothercare is searching for a new chief executive, following the departure of Ben Gordon in November. Alan Parker, the chairman, is leading the company until a replacement for Mr Gordon is found.
The maternity retailer was dealt a fresh blow last week when the online baby products retailer Kiddicare, which was acquired by Morrisons last year for £70m, bought the 10 shops exited by the electricals retailer Best Buy UK.
Carphone Warehouse, which has discontinued the joint venture with Best Buy's UK stores, paid Morrisons £40m to take over the leases on the shops. Kiddicare will spend £15m converting the stores to the Kiddicare brands, creating 700 new jobs in the process. The first converted store will open before the autumn.
Scott Weavers-Wright, chief executive of Kiddicare, said: "These stores will put Kiddicare within easy driving distance of nearly a third of the UK population."
Matthew McEachran, analyst at Singer Capital Markets, said: "As Mothercare is currently embarking on a full review and strategic turnaround, this move [by Kiddicare] can only be viewed as a competitive threat."
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