Toys ‘R’ Us champion puts US$100 million in long-shot bid to save company
The head of the company that created Bratz dolls and Little Tikes is putting US$100 million toward a long shot bid to save Toys ‘R’ Us.
MGA Entertainment Chief Executive Officer Isaac Larian is aiming to buy the toy-store company’s assets as part of an investment group that includes a crowdfunding campaign.
He said it’s his own money on the line, and MGA isn’t part of the bid. If he’s successful, the executive expects that 200 to 400 US stores can be saved.
“There is a lot of value in the Toys ‘R’ Us name, a lot of value in all the assets that they have,” Larian said in an interview. “If Toys ‘R’ Us is not here, I think the toy business as a whole will have a devastating year – this year and the following year.”
Larian’s push to help the toy retailer survive liquidation includes a bid that a group of investors made for the Canadian assets of Toys ‘R’ Us last week.
He and other investors also launched a campaign on GoFundMe for the purchase of US assets from the company. Their goal is to raise US$1 billion by Memorial Day.
The bankruptcy and subsequent liquidation of Toys ‘R’ Us has bludgeoned toymakers, which stand to lose a key distribution channel and platform to test new products.
Mattel Inc’s stock has lost about 47 per cent of its value in the last 12 months, with Hasbro slipping more than 14 per cent over the same period. MGA, based in Van Nuys, California, is privately held.
Amazon.com is also said to be considering buying some of the stores in a move to expand its retail footprint and showcase hardware like the Echo line of devices.
The liquidating company filed for bankruptcy in September and has struggled to find bidders for other assets.
Toys ‘R’ Us has about US$5 billion of outstanding debt – a fact that has complicated efforts to rescue the chain. The debt load is the legacy of a leveraged buyout in 2005 in which Bain Capital, KKR&Co and Vornado Realty Trust took the retailer private.
On Friday, Toys ‘R’ Us opened its doors with a going-out-of-business sale, offering clearance discounts at all 735 US stores, including Babies R Us.
The company did not say how big the discounts will be or when it expects stores to shut down. Last week, the company said it would close or sell all its stores after operating for months under bankruptcy protection.
The Babies R Us website will be open for a “limited time,” the company said, but did not provide specifics. It urged customers to write down the products on their registry before it disappears. It is no longer accepting new baby registries.