Waterstone eyes Early Learning

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The Independent Online

The retail entrepreneur Tim Waterstone, who founded the chain of bookshops that trades under his name, has turned his attention to the Early Learning Centre.

Mr Waterstone is said to be in negotiations to buy the chain for some £80m from its current private equity owners, Barclays Private Equity and 3i, and management. The talks come less than a year after Mr Waterstone walked away from the bidding for Hamleys - the toy shop which was sold to the Icelandic retailer Baugur instead.

"I suppose this [Early Learning Centre] is an alternative [to Hamleys] for him," Richard Ratner, an analyst at Seymour Pierce, said.

Barclays Private Equity and 3i, which backed a management buyout of the Early Learning Centre from John Menzies two years ago, are said to have granted Mr Waterstone exclusivity to negotiate the deal. The pair had previously been considering an exit from the chain and had hired the merchant bank Close Brothers to investigate their options, including a flotation.

Buying the Early Learning Centre would make sense for Mr Waterstone, City analysts said, as it would fit with the Daisy & Tom children's toy and clothing chain he founded.

One analyst speculated that Mr Waterstone needed a profitable operation to prop up the Daisy & Tom chain, which is said still to be loss-making. Chelsea Stores, the owner of the chain, made a loss of £1.5m in the year to May 2001.

The Early Learning Centre made pre-tax profits of about £400,000 last year. It is also owned by its senior managers, who are said to hold as much as 50 per cent of the chain - meaning an offer from Mr Waterstone could trigger a payout of up to £40m for the team at a valuation of £80m. Mr Waterstone is said to have outbid several other buyers to get exclusivity on the deal.

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