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Old 2005-03-17, 06:13 PM   #1
Ultimate Weapon
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Default Toys 'R' us accepts $6.6 billion buyout

CHICAGO (MarketWatch) -- With a final price tag of $6.6 billion, Toys "R" Us Inc. said Thursday it has agreed to a buyout by a private investment group in a deal that far exceeds earlier offers while abandoning previous plans to sell the company in parts.



http://www.marketwatch.com/news/stor...eid=mktw&dist=
 
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Old 2005-03-17, 07:50 PM   #2
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Link doesn't work.

Does that mean that Toys 'R Us will still be around?
 
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Old 2005-03-17, 09:30 PM   #3
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Default Here is the entire article.

The investment group that ultimately won the bidding war includes affiliates of Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC and Vornado Realty Trust (VNO: news, chart, profile) .

The price breaks down to $26.75 a share, plus an undisclosed amount of the retailer's debt. Each partner is to have an equal stake in the Wayne, N.J.-based company (TOY: news, chart, profile) , which includes the toy division, the Babies "R" Us division, a handful of Internet sites and a fledgling international Toys "R" Us division.

Shares of Toys "R" Us climbed $1.28, or 5.2 percent, to $26.05 in afternoon dealings, after climbing as high as $26.35.

It's unclear whether the buyers intend to keep the company whole, though it's widely expected a number of underperforming stores will be shuttered.

In an interview on CNBC, Chief Executive John Eyler boasted about the price the business fetched and said he expects both the toy and the baby-goods divisions to "be around for a very long time."

"This is not a real-estate play," he said, noting that there were "great assets" in the properties. "It is, clearly by the price, a long-term" business decision, he said.

"We're going to grow Babies like crazy and we're going to grow international like crazy," he said. The toy division gained market share over the holiday period, which Eyler said was indicative of the prospects of the business.

Initially, Toys "R" Us was interested in separating the toy division from Babies "R" Us, which is more lucrative. The toy division has suffered from fierce competition in recent years as discounters like Wal-Mart Stores Inc. (WMT: news, chart, profile) and Target Corp. (TGT: news, chart, profile) have sold toys at deep discounts during the holidays to lure customers into their stores.

At the same time, Babies "R" Us has seen robust growth selling baby clothing, equipment and accessories. Eyler has long complained that the market didn't value the growth pieces of the company business, which also includes the international division.

Change of plan

With that in mind, the company said in August that it intended to sell the toy division. At the same time, Toys "R" Us trimmed $125 million in costs -- most coming from toy manufacturers -- as it prepared for the holidays.

But plans to break the company up changed in recent weeks as it became clearer that dividing the two divisions would be difficult and costly, especially since they both share distribution facilities.

"During the course of our strategic review, we redefined our business model and sharpened our competitive position," Eyler said in a written statement announcing the sale. "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."

The deal is expected to close by July, pending regulatory and shareholder approval.

If completed, the buyout would bring a high-powered investor group with divergent backgrounds into the retail-toy industry.

KKR, a well-established leveraged buyout firm, has played a key role in some of the world's most notable mergers and acquisitions. It generally takes a company private, builds it up and then takes it public again or sells it for a premium.

Bain also is a large private-equity group that has taken positions in such wide-ranging companies as Domino's Pizza (DPZ: news, chart, profile) and Staples Inc. (SPLS: news, chart, profile) , among others.

Vornado, on the other hand, is a real-estate investment trust that owns and manages about 87 million square feet of real estate, including the Merchandise Mart in Chicago. It is expected that the company will pull profits out of some valuable real estate on which Toys "R" Us stores are now sitting.

In 1980, Vornado bought the Two Guys retail chain based in New York and slowly converted the properties to higher-value uses, such as office buildings. Most of Vornado's holdings are in New York and Washington.

Harris Nesbitt analyst Sean McGowan promptly downgraded shares of Toys "R" Us after the news. He had expected the company to sell for about $27 a share.

"With a definitive agreement at $26.75 a share, we see no reason to alter this target," he said in a morning note to clients.

"We do not see enough upside left in the stock to justify an 'outperform' rating," he said. "Of course, there is always the possibility of a higher bid emerging. However ... we think this would be highly unlikely."

UBS analyst Gary Balter also trimmed his rating on the company to a "neutral."
 
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Old 2005-03-22, 11:41 PM   #4
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I seriously hope that Toys'r'us goes under. I hate those F**kers.
The screwed me over on the Twentith Optimus Prime.
In the words of Galvatron, they are nothing more than
"DECEVERS! BETRAYERS! FIVE FACED SLIME OF THE NEBULA!!"
 
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Old 2005-03-23, 01:44 AM   #5
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Quote:
Originally posted by Cassettacon 27

In the words of Galvatron, they are nothing more than
"DECEVERS! BETRAYERS! FIVE FACED SLIME OF THE NEBULA!!"
They're quintessons?
 
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Old 2005-03-27, 06:16 PM   #6
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I hope they dont go under. Someone needs to stick around otherwise many of the colelctors with a conscience will have no place to go since we refuse to spend a dime in Wal Mart.

Toys R Us may drop the ball on some deals but that's better than running whole towns economys into the ground.
 
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Old 2005-03-28, 01:47 AM   #7
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Hey, I'm a Toys R Us kid and I really don't want this buyout to destroy TRU. That said, I have no problem walking to a wal-marche and buyin 2 fer one engergon delux figures. Wal Mart is not my favorite place to shop, but I refuse to accept the "Wal-Mart kills ma and pa shops" ideology. When Ma sells me 2 at one price i'll shop there...my piece is spoken...
 
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Old 2005-03-28, 04:03 AM   #8
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Quote:
Originally posted by another tf fan
Hey, I'm a Toys R Us kid and I really don't want this buyout to destroy TRU. That said, I have no problem walking to a wal-marche and buyin 2 fer one engergon delux figures. Wal Mart is not my favorite place to shop, but I refuse to accept the "Wal-Mart kills ma and pa shops" ideology. When Ma sells me 2 at one price i'll shop there...my piece is spoken...
Wal-Mart is destroying American businesses. I'm not going to explain it, you can look it up if you want to know how. But I don't give them my business anymore, especially with their unsavory tactics and their abuse of underprivileged illegal immigrants.

Also, TRU is just about the last "toy specific" store there is. I hope they don't go under I love video games, but I'd hate to see them push toys out of kid's lives. As a child with an SNES and a Bruce Wayne's manor, I know that toys are something special.
 
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Old 2005-03-28, 05:16 AM   #9
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Lets just cross our fingers and hope to Primus for the best. In the meantime, start buying what you can from TRU to help out, though it could be too late at this point.
 
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Old 2005-03-29, 12:48 AM   #10
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Quote:
They were Quintissions?
They were as evil as Quintissions. Besides, why go to TRU and pay double the price of a toy you can get at Wal-Mart for half the price?
It's going under. In ten years, it'll be whipped off of the face of the Earth.
 
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Old 2005-03-29, 03:27 AM   #11
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Long Live Toys R US.
 
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