Trefoil Capital Investors, a Burbank partnership recently formed by Roy E. Disney's Shamrock Holdings Inc. to invest in ailing companies, said Monday that it has agreed to buy toy retailer Child World Inc. in a two-step transaction.
Trefoil would first acquire the 82% stake in Child World that is owned by debt-laden CNC Holding Corp., a Cleveland-based retail concern, in exchange for assuming an undisclosed amount of CNC's debt, said Stanley P. Gold, head of Trefoil's general partner and Shamrock's president. Trefoil then plans to buy the remaining 18% stake held by the public for $14 a share, or $28.3 million.
Assuming that CNC's stake also carries a $14-a-share value, the total deal would have an indicated value of $157.2 million.
Child World, an Avon, Mass.-based company, has 175 stores in 31 states and is the nation's second-largest toy chain behind Toys R Us. There are no Child World stores in Southern California, but the company had previously announced plans to expand here over an unspecified period.
Both Child World and CNC have been struggling recently. Child World's profit last year fell 54% to $5.83 million from $12.6 million in 1988, despite an increase in sales to $830.3 million from $807.1 million.
Child World's stock has been volatile since May, when it was disclosed that CNC was negotiating to sell its stake. The stock jumped $1 a share Friday to $14, and closed Monday at $13.75 in over-the-counter trading, meaning that Trefoil currently is offering little premium over the stock's market price. But Gold said Trefoil is "paying a fair price" for the company.
The purchase of Child World would mark the first major deal for Shamrock's executives since they made a failed, $3-billion bid to acquire Polaroid Corp. in early 1989. They recently raised $450 million from investors to fund Trefoil.
Trefoil plans to look closely at retailers because of Shamrock's experience in the industry. Shamrock's holdings include the 71-store Music Plus chain of music and video stores in Southern California and the 140-outlet Sound Warehouse chain based in Dallas. It also owns three television and 15 radio stations.