Bosses plan buyout at famous toy store Hamleys

London’s famous Hamleys toy store was today the subject of a management buyout deal worth £47.4m (€67.9m).

Icelandic retail group Baugur said the board of Soldier, a company created to make the offer for the Regent Street group, had agreed a proposed deal with a management team from Hamleys to take the business private.

If the deal goes through, Baugur will take ultimate control of Soldier, with the Hamleys managers owning a minority interest.

Besides its flagship central London store, Hamleys has satellite outlets at Heathrow Airport, Covent Garden in central London and Schiphol Airport in Amsterdam.

It also has a web-based direct sales operation and 37 specialist Bear Factory soft toy stores in the UK and overseas.

The deal, at 205p a share, will represent a 62% increase in the Hamleys share price over the 126.5p average price at the time when the possible MBO was announced in mid-March.

Hamleys was floated on the London Stock Exchange in May 1994, but suffered declining profitability in the two years leading up to March 2000.

New senior management turned the firm round from 2000, including a refit of the Regents Street store and termination of unsuccessful diversification activities pursued by the previous management, a statement from Soldier said.

Hamleys independent directors said the growth they believed the store group now needed would be best achieved through the deal.

Jim Hodkinson, chairman of an independent committee set up to look at bids for the group, said it had taken a three-month competitive process to achieve an offer that the committee was pleased to recommend.

Chief operating officer of Hamleys, John Watkinson, who is leading the bid with the group’s finance director Ian Parker, said: “We believe this is a good deal for the company and the right thing for the employees and the customers”.

Accountancy firm KPMG will make the offer to Hamleys on behalf of Soldier.

Baugur chief executive Jon Asgeir Johannesson said the group saw the deal as a significant opportunity to boost its UK retail interests.

“The acquisition of Hamleys is an important step in Baugur’s international strategy and we are looking forward to working with the Hamleys management team to continue the successful development of the business,” Mr Johannesson said.

The Reykjavik-based retailer has built a 22% stake in Big Food Group, 8% in House of Fraser, 3% in Mothercare and 1% in JJB Sports.

It has never bought a business outright, but made £55 million profit last year when selling its stake in Arcadia, the Burton and Top Shop retailer, to billionaire Philip Green.

Hamleys today said group profit before tax and one-off items for the year to March 29 increased 35% to £5.6 million, from £4.1m (€5.8m) in 2002.

Operating profits before exceptionals were up 27% to £6.3m (€9m) from £4.9m (€7m) last time.