Right Start Closes Zany Brainy Purchase
By Edward Nawotka -- Publishers Weekly, 9/17/2001
Right Start, a chain of specialized educational toy stores for infants and children up to age four, has completed its purchase of Zany Brainy, the 10-year-old children's multimedia retailer (News, July 16). Under the terms of the transaction, Right Start acquired the operating assets of 187 Zany Brainy retail stores for approximately $100 million. Tom Vellios will remain CEO of Zany Brainy.
In addition, Right Start sold $22.3 million of convertible securities representing 48% of the company stock to Athanor Holdings, LLC, an affiliate of Waterton Management, which made the initial overtures to purchase Zany Brainy last summer.
Jerry R. Welch, Right Start chairman and CEO, said in a prepared statement, "We are very excited about the combination of Zany Brainy and Right Start. Both companies have well-known, highly regarded brands and a very loyal following with affluent parents and their children. Zany's focus on kids 4 12 fits perfectly with Right Start's focus on kids up to age 4."
Right Start primarily sells child development products, but also stocks child seats, strollers and related accessories. Books are a sideline. Right Start has indicated that it will pursue cross-marketing opportunities between the stores and will open Right Start boutiques inside existing Zany Brainy stores.
Vellios told PW, "The companies fit so well together that it just seemed like a perfect match. The businesses are so complementary that now customers have the alternative to use Zany Brainy as a one-stop shop for the child, infancy to 12 years old. Each company is focusing on the fourth quarter." He added that Zany Brainy's acquisition of Noodle Kidoodle in 2000 taught a number of lessons and, consequently, both companies are taking the merger slowly. For example, the merged companies will maintain separate headquarters for the time being.
Vellios said, "Right now our goal is to get Zany Brainy back in shape and ready, both online and off, in time for Christmas and to make it possible for Right Start to have as successful and profitable a fourth quarter as possible."
