Musgrave has sold its SuperToys-World of Wonder retail brand to British group Youngsters in a multimillion euro deal.

The Cork-based wholesale and retail group said the move was triggered by its decision to concentrate on its core areas of operation. Musgrave's managing director, Mr Michael Nason, added that the sale was partly prompted by the company's recent acquisition of the British supermarket group Budgens, which it bought for an estimated €270 million last year. It had been rumoured that management at the toy retail franchise might try to buy out the operation.

The price paid by Youngsters, the second-largest independent toy distributor in Britain, was not disclosed.

The retail chain has established itself as one of the leading toy franchises in the country since it was formed in 1985, with a network of 43 stores nationwide. With €60 million in turnover last year, it holds a 23 per cent share of the estimated €260 million a year Irish toy market.

However, the chain was a marginal contributor to Musgrave's turnover, which is expected to total in excess of €3 billion last year.

Musgrave is expected to publish its annual accounts in the next fortnight. Debt is likely to have risen significantly as a result of the Budgens takeover.

SuperToys-World of Wonder was not seen as a core business of the group and analysts believe the disposal of the subsidiary might have been part of a debt-refinancing strategy.

Musgrave's recent expansion into catering contracts with Eurest, its acquisition of Budgens and the €40 million purchase of six SuperValu stores have fed speculation recently about the possible disposal of the World of Wonder franchise.

But news of yesterday's sale to Oxfordshire-based Youngsters came as a surprise to some industry sources who had mooted a possible management buyout of the franchise.

Mr Nason said the move was stymied because of the challenges to the World of Wonder management team of establishing an independent company to run the supply, marketing and administration services of an independent franchise.

He added that the management and the retailers, some of whom also own Centra and SuperValu stores, had to agree any change.

Musgrave stressed no jobs would be lost as a result of the sale to Youngsters and said that retailers of the toy franchise had broadly welcomed the move.

Commenting on the deal yesterday, Mr Nason reiterated the focus of Musgrave on its core activities in food distribution: "The Musgrave group has a long and proud association with the SuperToys and World of Wonder retailers since 1985. However, we are primarily a food distribution company and have for some time been considering the best strategy for the development of the division."

Youngsters, which employs 50 people, supplies toy and nursery products to a network of 250 stores throughout the UK and Ireland. Its turnover is estimated at just under €100 million.