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.


close

Next Article in Multichannel Marketing

Sign up to our newsletters

Company of the Week

PAN Communications is an award-winning integrated marketing and public relations agency for B2B technology and healthcare brands. PAN's data-driven approach allows the firm to specialize in public relations, social media, content and influencer marketing, and data and analytics. PAN partners with brands to create unique, integrated campaigns that captivate audiences and drive measurable results. PAN services clients out of the firm's four offices: Boston, San Francisco, New York City and Orlando.

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