Waterstone eyes up Early Learning Centre

Entrepreneur Tim Waterstone is understood to be preparing a bid for children's retailer Early Learning Centre, after it emerged that venture capitalist 3i is considering a sale.

However, Waterstone would face a counter-offer from ELC's management - led by chief executive Mike France - who already own a 50 per cent stake.

Last year, Waterstone failed in his attempt to buy Hamleys with backing from Rhone Capital, but ELC would fit in well with his smaller Daisy & Tom toy chain.

Early Learning Centre has moved from losses five years ago to a forecast EBIT increase of 60 per cent to£8.5 million in the year to April 30.

In the six weeks to January 7, like-for-likes increased by 5 per cent.

The retailer has 212 stores, 55 Debenhams concessions and 200 Sainsbury's concessions. It is also increasing its presence in Boots from 22 to 124 shops after a trial.

France was unaware of interest from Waterstone, but a well-placed source said Waterstone was 'very serious' about bidding. Waterstone was not available for comment.

France said ELC has 'no net debt', and one option was a buy-out of the 3i stake. 'The business is undergeared, so we could borrow enough to increase our (management's) stake to 100 per cent,' he said.