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Toys R Us To Be Bought Out

Miscellaneous: Jay Cochran - 2005.03.17
Reuters is reporting this morning that the U.S. private equity firms Kohlberg Kravis Roberts & Co. and Bain Capital have teamed up with Vornado Realty Trust to buy retailer Toys R Us Inc. for about $5.7 billion, a source close to the process said on Thursday.

The group beat out rival Cerberus Capital to win the auction for the whole of the retailer after a hotly contested battle for its toys business.

The offer represents about a 10 percent premium over the company's latest market value of $5.2 billion, according to Reuters data.

Last summer, under pressure from Wal-Mart Stores Inc. and other powerful competitors, Toys R Us put its toy business up for sale and said it planned to focus on its faster-growing Babies R Us stores, which sell infant clothes, linens and furniture.

Some of the company's 700 U.S. toy stores are seen as more valuable for their real estate than as sales outlets. Private equity firms in particular are drawn to real estate, because they can use buildings as collateral against the loans they secure to buy a business.

It is not immediately clear if the buyout group plans to keep the New Jersey-based retailer intact or break it up, closing the U.S. toy business and focusing on the Babies R Us unit and 600 overseas stores, which have faced less competition. Click here for the full story.

Thanks to ScottieEvil for the heads up.

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