Mothercare, Boots in children's clothing deal

Customers leave a Mothercare shop in London October 11, 2008.

LONDON (Reuters) - Mothercare and Alliance Boots have agreed to design, source and supply a new children's clothing and accessories brand to be sold in Boots stores in the UK and Ireland.

In a joint statement on Tuesday the two firms said the agreement builds on an existing deal where Boots sells Mothercare's Early Learning Centre toys in over 400 stores.

Ben Gordon, chief executive of Mothercare, said the latest agreement represented a "substantial development" in the firm's recently announced strategy to target wholesale business.

Shares in Mothercare closed on Monday at 642 pence, valuing the firm at 566 million pounds.

Alliance Boots is owned by Executive Chairman Stefano Pessina and private equity firm Kohlberg Kravis Roberts

(Reporting by James Davey, editing by Mark Potter)