A consortium of two private-equity firms and a real estate developer has reportedly agreed to pay $5.7bn (€4.2bn) to buy all of New Jersey-based Toys R Us, the second-biggest toy retailer in the US.
The parties in the consortium are private-equity firms Bain Capital LLC and Kohlberg Kravis Roberts & Co., and developer Vornado Realty Trust, the Wall Street Journal reported in its online edition, citing sources close to the deal. All three companies will be equal partners in the acquisition, the paper said.
An official announcement was expected this morning.
The surprise sale last night ended a seven-month-long auction that had been expected to end in the sale of only the company’s toy division. The Wayne, New Jersey-based retailer had been expected to continue operating its more lucrative Babies R Us stores, but the two divisions were too closely associated to make a split feasible, the newspaper said.
The Journal said the consortium would likely sell some of the chain’s stores to other retailers, but would continue operating those that remain under the Toys R Us and Babies R Us names.
The retailer’s toy business has been hurt by price-cutting from the discount chains such as Wal-Mart Stores, the biggest toy seller in the US.
Although Toys R Us has 685 toy stores in the US and 603 overseas, the 216 Babies R Us have been an increasing factor in profitability.