Happy Birthdays on the cards for Hunter and Gorman in £100m deal

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The retail entrepreneurs Tom Hunter and Chris Gorman snapped up the card retailer Birthdays yesterday from the hands of its venture capitalists in a deal worth up to £100m.

Mr Hunter, through his West Coast Capital investment vehicle, and Mr Gorman, who runs the Gadgetshop retail chain, bought the entire share capital of Birthdays from 3i, PPMV and Permira. They owned about 80 per cent of the business, which was founded in 1966 and has more than 500 stores. The remaining shares were owned by a number of staff and management.

Mr Gorman, who made £35m from selling his internet company Reality Group in 2000, got to know the business last year when it agreed a deal to sell Gadgetshop products in its stores. He saw an opportunity to take over Birthdays and approached the venture capitalists behind the business.

Mr Hunter, who is worth about £425m after selling the sports retailer Sports Division to JJB Sports in 1998, is a backer of Gadgetshop and agreed to help Mr Gorman. He said Birthdays was a "good long-term investment for West Coast". He recently abandoned a merger of Allders and House of Fraser and will act as an adviser to Mr Gorman on running Birthdays.

The terms of the deal were undisclosed, but it is understood to have been worth between £60m and £100m. Mr Gorman said yesterday he has put a "number of millions" into buying the business, but West Coast is the largest shareholder.

Birthdays also owns the Partyland brand and has 100 Partyland outlets. Its headquarters are in Bury, Greater Manchester, and it employs some 3,500 people in the UK and Ireland. Its turnover in the past financial year to June 2003 was £144m.

The cross-selling partnership between Gadgetshop and Birthdays will continue, but both will stay independent of one another in the run up to Christmas. The new owners may, however, decide to merge the two businesses.

"I saw when I did the deal with them that a number of changes could be made to the way the business was run," Mr Gorman said. His stake in Gadgetshop is worth about £15m. "Today is day one, so I'll be getting in there to have a really good look at the business. We are keeping the management team on board and will be looking at opportunities for integration with Gadgetshop." Iain MacRitchie, chairman of Birthdays, will stay on in the enlarged group.

The Bank of Scotland also provided debt facility to help fund the acquisition.