The Right Side of the Brain

Waterton, the Los-Angeles-based private investment firm that in Julysaid it would acquire Zany Brainy Inc. (King of Prussia, Pa.), announcedlate last week it would join forces with Right Start Inc. Waterton willinvest $20 million in exchange for 48 percent of Right Start's shares.

Right Start (Calabasas, Calif.), which operates 68 stores in 16 states,sells upscale child and infant developmental products to upper-income,educated parents. Items include strollers, car seats, mobiles,remote-controlled lullaby nightlights and bug-proof stroller netting.Thursday, Right Start announced its plans to acquire all 187 Zany Brainystores for $11.7 million, $1.1 million common shares, as well as theassumption of nearly $85 million of its debt.

Zany Brainy, the 10-year-old company that in 1998 claimed to be”America's fastest-growing multimedia educational kids superstore,”found itself in a jam after spending $20 million in 1999 to acquirerival Noodle Kidoodle's 60 stores and inventory. Right Start hopes ZanyBrainy's targeted market of four-to-12-year-olds will help keep its owncustomer base for a longer period of time.

As part of the acquisition, Right Start plans to use the Zany Brainybrand name to its benefit. The company will install 2000-square-footRight Start boutiques within Zany Brainy's 10,000-square-foot stores.Right Start says that once the company emerges from bankruptcyprotection, it has plans to close about 12 Zany Brainy locations. Thedeal to acquire Zany Brainy is expected to close before September 5.