Waterstone plans more deals after buying ELC for £62m

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The Independent Online

Tim Waterstone plans to keep stalking UK retailers despite just closing a £62m deal to acquire the Early Learning Centre from the private equity group 3i.

The founder of the eponymous book chain intends to merge the educational toyshop group with Daisy & Tom, his loss-making children's clothing chain, to create a new force in children's retailing. Both brands will be retained.

The deal, which nets the ELC management a £30m windfall, ends something of a losing streak for Mr Waterstone. His bid to buy Hamleys last year was thwarted by Iceland's Bauger, while numerous attempts to buy back the Waterstone's chain from HMV have failed.

Yesterday he said more deals could follow. "We have got wonderful backers," he said. "If we find other synergistic retail companies we'll have a look at them."

DC Thompson, the corporate owner of The Beano, and Rhone Capital, the private equity firm - both long-term supporters of Mr Waterstone - are backing the ELC acquisition.

Mike France, who ran ELC, and Peter Ellis, its chairman, are among the retailer's senior executives who will step down on completion of the deal, although Mr France will stay on the board of Mr Waterstone's new investment company, Eagle Retail, for 12 months as a non-executive director.

Nigel Robertson, the former joint managing director of the online retailer Ocado, is joining Eagle Retail as chief executive, with a new external finance director set to follow.

John Menzies collected £21m from 3i for ELC in late September 2001, when it was selling non-core businesses to focus on its airport logistics division. The venture capital group also took on £9m of debt, which it has since paid down.

ELC, which trades from more than 200 UK sites and also operates concessions in Debenhams stores, is expected to report earnings before interest, tax, depreciation and amortisation of £14.5m this year. It has annual sales of some £170m, while Daisy & Tom's five outlets have a turnover of £15m.

Mr Waterstone said he planned to roll out Daisy & Tom, which will stock ELC products.

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