The Babies Galore chain is to get a makeover after Sydney company Headline Group Ltd (HLD) acquired it for $8.8 million in an effort to convert the babywear retailer to the Mothercare brand. Mothercare is a UK based maternity and baby-wear retailer with around 1,200 stores in 53 countries and is expanding into the Australian market through HLD.

HLD, which will be backed by the influential Myer business family, will refit the Babies Galore stores and plans to convert the majority of locations to Mothercare parenting centres over the next 18 months. "Basically we want to build an Officeworks, Supercheap Auto type, category killer brand throughout Australia and there hasn't been one at the moment in Australia," HLD chief executive Gordon Elkington told AAP.

"We like the (baby) category and we like the fact that there's not a lot of barriers in people's spending habits when it comes to babies, especially the first babies."Earlier this year, HLD announced it was purchasing Western Australia baby retailer Baby on a Budget, in order to incorporate the stores into the Mothercare franchise.

To strengthen the HLD balance sheet, the Myer Family Company (MFC) and Allegro Private Equity have each invested $5 million into HLD. MFC's investment is initially a convertible note that will convert into 16.7 million HLD ordinary shares at a conversion price of $0.30 per share. Allegro's investment will be for 16.67 million HLD ordinary shares.

MFC and Allegro will both nominate a director to the HLD board. The transaction will take HLD to an estimated annual turnover run rate of between $90 million and $100 million for this 2010/11 financial year, according to a media release from HLD.