Toys R Us agrees $6.6bn sale
KKR acquires global operations
Toys R Us has agreed a $6.6bn deal to sell its entire business to a consortium led by Kohlberg Kravis Roberts.
The deal will see each of three investors – Kohlberg Kravis Roberts, Bain Capital Partners LLC, and Vornado Realty Trust – each acquire an equal share of the business. It includes both the US and international Toys R Us stores, as well as the Babies R Us US chain.
The retailer had originally invited offers for the Toys R Us stores, planning to split them from the better-performing Babies R Us stores, but changed its strategy in recent weeks when prospective buyers for the entire business emerged.
The investment group will acquire all of the outstanding shares of Toys R Us for $26.75 per share, totalling $6.6bn plus the assumption of debt.
John Eyler, chairman and chief executive of Toys R Us, said, “We are pleased to announce this transaction, which brings our strategic review to a very successful conclusion. There was competition among bidders during the review process, and the acquisition price reflects the compelling value of the global Toys R Us and Babies R Us operations and assets.
“During the course of our strategic review, we redefined our business model and sharpened our competitive position. This enabled us to strengthen the value we provide to our customers, and we were rewarded with market share gains this past holiday season. We believe that our new financial partners will help us build on this momentum and we look forward to a successful future as a leading toy and baby products retailer.”
Matt Levin, managing director of Bain Capital, said: “Toys R Us and Babies R Us are premiere franchises with strong global brand recognition and a collection of high quality product offerings including toys, children’s apparel, and baby products and accessories. We are excited by the prospect of partnering with the management team and employees to strengthen the long-term operating and financial performance of the businesses.”
Steve Roth, chairman and chief executive officer of Vornado, said:”We are delighted to be partners with Bain and KKR, and look forward to building significant value for our investors.”
[img r]babiesrussign.jpg[/img]Michael Calbert, director at KKR, said: “We are delighted to be joining forces with Vornado, Bain Capital and the employees and management of the company to realize the full potential of the Toys R Us and Babies R Us businesses and brands in the U.S. and internationally.
“We look forward to building on the many strengths of the company to make the stores a better place to shop and work.”
Completion of the deal is contingent on regulatory approval as well as backing by shareholders of Toys R Us, expected to be in place by July.
Toys R Us operates 681 toy stores in the US and 601 international toy stores, including licensed and franchise stores, while Babies R Us is the largest baby product specialty store chain in the world, with 218 stores in the US.
