Toys for Sale, But Who’s Buying?

Toys “R” Us (Wayne, N.J.), the nation’s second-biggest toy retailer, has reportedly narrowed the field of potential buyers of its toy operation to four groups and, said The Wall Street Journal, is pressing them to sweeten their offers in a final bidding round.

The Journal, citing unidentified people familiar with the matter, said the groups have offered $3 billion to $3.5 billion for the unit, which the newspaper said was at the high end of what analysts expected for the 975-store global toy store chain. The company had said in August 2004 that it was considering the sale of the unit, and The Journal reported that it has received about a dozen overtures.

Toys “R” Us management had said it wants to separate its struggling toy business from Babies “R” Us, the baby-goods chain that is doing better. The toy business accounts for about 80 percent of its sales. The company closed its Kids “R” Us children's clothing stores in 2004.

The Journal identified the four remaining bidding groups, all financial investors and buyout specialists, as: Kohlberg Kravis Roberts & Co.; a partnership of Apollo Advisors LP and Permira Advisors Ltd.; an alliance between Bain Capital LLC and Vornado Realty Trust; and a group that includes Cerebus Capital Management LP, Kimco Realty Corp. and Goldman Sachs Group Inc.