Deal Breathes New Life Into Toy Biz
By George Anderson
Jim Silver, publisher of the industry magazine Toy Book, thinks the deal by Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC, and Vornado Realty Trust to buy Toys ‘R’ Us for $6.6 billion and take it private is great. In fact, he believes it will bring “new life into the toy business.”
Mr. Silver’s optimism is based on a belief that new management will seek to reinvent Toys ‘R’ Us and hasn’t simply bought the company as a real estate play. “I can envision Toys ‘R’ Us becoming a family entertainment store, where you can buy an iPod or an entry-level digital camera. It will be a one-stop shop,” he told The Associated Press.
Chris Byrne, an independent toy consultant, agrees with Mr. Silver’s assessment. “It will help them become a more streamlined operation with diverse products, not just toys, but lifestyle products.”
Moderator’s Comment: What are your thoughts on Toys ‘R’ Us becoming a family entertainment business instead of strictly a toy retailer? Will it make
the retailer more or less competitive by broadening into other product categories? Will the retailer have to reevaluate its pricing strategy?
According to Jim Silver, many in the industry were concerned that another group would win the bidding for Toys ‘R’ Us and begin selling off stores. While
he and others acknowledge the new owners are likely to make cuts, Mr. Silver believes KKR is looking to run the business as an on-going retail concern. –
George Anderson – Moderator