Toys ‘R’ Us Is Exploring Options for Its $2 Billion Asia Business – Bloomberg

Toys “R” Us Inc., the retailer that filed for bankruptcy in North America, has been exploring options for its growing Asian business including a potential initial public offering, people with knowledge of the matter said.

The U.S. chain and its local joint venture partner, the billionaire Fung brothers, have been speaking with investment banks to study the feasibility of listing the Asian business on the Hong Kong bourse, according to the people. A deal could value the unit at as much as $2 billion, the people said, asking not to be identified because the information is private.

Toys “R” Us and some of its North American subsidiaries filed for bankruptcy last month, though its Asian unit wasn’t included in the proceedings. Deliberations are at an early stage, and Toys “R” Us hasn’t decided which path to pursue, the people said. Toys “R” Us owns about 85 percent of the Asian venture while Fung Group, the private holding company of Hong Kong businessmen Victor and William Fung, holds the remainder.

The ongoing bankruptcy could make a listing more complicated and harder to market to investors. Still, an IPO of the Asian unit would allow Toys “R” Us’s private-equity owners to recoup some of their investment by selling shares in a business that’s still doing well. 

Toys “R” Us dominates the $20.7 billion Asia Pacific market for traditional toys and games, according to consultancy Euromonitor International. It had a 20 percent share of last year’s sales of dolls, action figures, puzzles and other similar products that lack a video-game component. Its closest competitor in the region had a 1.4 percent share, the Euromonitor data show.

Japan, Southeast Asia

Growth in Asia Pacific helped offset weaker sales in the U.S. and Europe in the quarter ended April 29, Toys “R” Us said in June. Earlier this year, the company combined its Japanese business with a joint venture running stores in greater China and Southeast Asia. The merged business operates more than 400 outlets, according to its website.

The toy retailer’s owners had initially discussed the feasibility of listing the Asian business as early as 2018, but some parties view that timeline as too ambitious because of the complexities related to the bankruptcy proceedings in the U.S., the people said.

Representatives for Toys “R” Us and its owners, KKR & Co., Bain Capital and Vornado Realty Trust, declined to comment. A spokeswoman for Fung Group also declined to comment.

Comments

Write a Reply or Comment:

Your email address will not be published.*