March 17, 2005
KKR & Toys "R" Us
Posted by Christine Hurt

KKR, the buyout firm so memorably portrayed in the book and movie Barbarians at the Gate (the KKR guys were the barbarians), will join two other firms in acquiring Toys "R" Us.  The Christmas Eve question of "how long does it take to put this toy together" may be reversed here:  How long will it be before Toys "R" Us is taken apart?  The same market pressures that Toys "R" Us faced from retailers such as Wal-Mart will still be there after the acquisition, so how will the new owners squeeze value for the acquisition?  Historically, buyouts are usually followed by sales of some assets.  Here, KKR has mentioned that Toys "R" Us owns most of the real estate for its stores.  Hmmm.  Others have mentioned that while the toy divisions lose money, the baby divisions make money.  Hmmm.

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Comments (1)

1. Posted by Bob on October 21, 2005 @ 20:12 | Permalink

I own a small portion of Toys R Us bonds, (less than $10K). The bond continually gets degraded, which seems to make no sense in view of the comment above that real estate value of the store exceeds the debt. What am I missing?

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