Right Start Snares FAO Schwarz Name in $55M Deal

Share this content:
Educational products retailer Right Start Inc. said yesterday that it would buy some assets of FAO Schwarz, including its flagship Fifth Avenue store, for $55 million in stock and debt, in a move to become a specialty retailer in high-end children's products, according to reports.

Before the deal is concluded in January, FAO Schwarz's owner Dutch retailing giant Vendex International NV, said it will close 17 of 42 FAO Schwarz shops nationwide. One-third of 1,500 jobs will be cut.

The sale of FAO Schwarz became a priority after the chain posted a first-half operating loss of $8 million this year. Vendex agreed to pay tens of millions in restructuring charges, cover expected losses of $17.6 million for the full year and lend the buyer $18 million for integration costs. As part of the agreement, Vendex will receive a 15 percent stake in The Right Start, but plans to divest the interest as soon as possible.

Right Start will take over 22 FAO Schwarz stores in the United States, the Internet and catalog operations and rights to the FAO Schwarz name.

FAO Schwarz's owner, Dutch retailing giant Vendex International NV, will acquire a major stake in Right Start as a result of the transaction.

Right Start will issue Vendex preferred stock convertible into 5 million common shares worth about $27 million and an $18 million four-year note. It will also assume about $10 million in liabilities from Vendex.

The deal is subject to regulatory approval and certain third-party consents.


Next Article in Multichannel Marketing

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above