Toys R Us deal imminent?

Reports suggest Toys 'R' Us is on the brink of selling its global toy business for up to $3.5bn (£1.8bn). The firm is understood to have a shortlist of four interested bidders for the 975 outlets a
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Reports suggest Toys 'R' Us is on the brink of selling its global toy business for up to $3.5bn (£1.8bn). The firm is understood to have a shortlist of four interested bidders for the 975 outlets across the US and abroad, including the UK. An announcement could be made next week.

It was announced six months ago that it would sell the underperforming toy business to concentrate on its successful Babies 'R' Us. There is interest from several private equity consortiums. They are thought to include a partnership between Permira and Apollo, and one between Bain Capital and Vornado Realty Trust. A group including Goldman Sachs and Cerebus Capital Management has also expressed interest, as has the buyout specialist Kohlberg Kravis Roberts.

The inclusion of Vornado, an investment trust specialising in property, and Kimco, a similar investment trust which is working with the Goldman group, indicates that the potential investors see the deal as an opportunity to pick up valuable real estate, rather than to gain control of the franchise.

Of its 975 stores, Toys 'R' Us owns the land and buildings at 314 locations in the US and 83 overseas. It also owns about 150 buildings on leased land in the US and 20 abroad. Analysts expect a buyer to sell off some of them, especially in Europe.

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