The deal, finalised over the weekend, will give Mothercare a combined 435 UK stores and 420 international franchise stores. The consideration will be in the form of Mothercare ordinary shares and the assumption of CSHL's net debt, about£36 million.
Mothercare chief executive Ben Gordon said: 'Mothercare and Early Learning Centre are each specialists in their own markets and the combination of these two brands will create a key destination for parents of babies and young children. Having completed Mothercare's turnaround and put strong foundations in place to build the business, the time is right to make this important strategic step.'
Seymour Pierce analyst Richard Ratner said: 'Synergies of£8 million should be achieved by the second full year after acquisition. [It] looks very positive.'
Ownership of the Daisy and Tom brand has been retained by one of the present CSHL shareholders.
Mothercare will license the Daisy & Tom brand and continue to run the stores in the short term. There are three Daisy & Tom stores - one in London, one in Dublin and another in Guildford, which is in the process of being closed.
Aside from chairman Tim Waterstone, the entire ELC senior management team is expected to move to the merged company and retain their present roles,
In the 52 weeks to May 5, CSHL's EBITDA is forecast to be about£7 million.
For the year to March 31, Mothercare's like-for-like sales at UK stores were up 0.8 per cent, rising to 1.6 per cent including the Direct business, and store sales rose 0.2 per cent. Total like-for-like sales were up 1.6 per cent for the year.