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Toys “R” Us to auction off Asia operations, starting with US$760m bid

Toys “R” Us Asia’s US counterpart has entered an agreement with Taj lenders to sell around 85% of its stake in the company for around US$760 million, which includes a continuation of the current IP license. The move will be made in an upcoming September auction which will put the business up for higher offers, the company confirmed to Marketing. The sale is expected to occur shortly thereafter.

Toys “R” Us Asia added that it is supportive of any process which “maximises value for the company” and will be supportive of any process which allows it to conclude its sale process, separate from its US parent and continue to pursue the next phased of Toys “R” Us Asia’s growth trajectory.

Currently, Fung Retailing is the minority partner for Toys “R” Us in Asia. A Bloomberg report explained that Toys “R” Us in US had wanted the US federal court to take away Fung Retailing’s right-of-first-refusal purchase option, as well as get Fung to sell its 15% stake in the joint venture. This was after Toys “R” Us had not been able to successfully get potential buyers to commit due to interference by Fung Retailing, the company claimed. This was after the business had allegedly received offers of more than US$1 billion from potential buyers.

Prior to the move, Toys “R” Us was reportedly exploring options for its US$2 billion worth Asia business with Fung Retailing, a privately-held entity and member of the Fung Group. According to Bloomberg at the time, both parties had been speaking with investment banks to study the feasibility of listing the Asian business on the Hong Kong bourse as early as 2018.

This was after the retailer filed for chapter 11 bankruptcy protection for its US and Canadian subsidiary to restructure the nearly US$5 billion that it has in debt. At the time, a Toys “R” Us Asia statement clarified that the Asia operations run as a separate legal entity, and is financially independent from all other Toys “R” Us operating companies around the world.

“Toys “R” Us (Asia) is open for business and continuing to serve our customers as we always do. We are a financially robust and self-funding retail operation, which continues to significantly grow and invest in this region,” Andre Javes, president, Toys“R”Us (Asia), said.

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