Russ exits gift biz
By Staff -- Gifts and Dec, 12/23/2008 3:51:00 PM
OAKLAND, N.J.—Gift and juvenile products maker Russ Berrie and Company said today it sold its gift business, which includes its plush toy lines, to The Encore Group, a privately held giftware company.
Encore acquired the stock of all of Russ Berrie’s active worldwide gift segment subsidiaries, as well as certain other assets of the gift business. In exchange, Encore gave Russ a 19.9 percent stake in its newly consolidated gift business, plus a promissory note for $19 million that matures in December 2013 and earns interest at an annual rate of 6 percent. In addition, Encore has retired the company’s gift credit line with LaSalle Bank.
Russ will retain its “Russ” and “Applause” brands, which will be licensed exclusively to Encore for five years for a fixed annual royalty payment of approximately $1.2 million. Encore will have the right to purchase these brands upon expiration of the license term, and Russ will have the right to require Encore to purchase the brands at the end of the license term, for an aggregate purchase price of $5 million.
Russ Berrie plans to stop using its current corporate name within 180 days, subject to shareholder approval. The combined Encore and Russ gift business will be known as The Russ Companies Inc. and will operate immediately under the Russ tradename.
Bruce G. Crain, CEO and president of Russ Berrie and Company, said in a statement, “Together with our prior acquisitions, the gift divestiture represents a transformational milestone that will enable us to focus our efforts on the attractive infant and juvenile market, while retaining a minority investment in the gift industry.”
Russ’ infant and juvenile business includes furniture maker LaJobi Industries and bedding and accessories firm CoCaLo, companies that Russ purchased in April 2008, as well as Sassy, marketer of developmental infant toys and similar baby products.
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