Dive Brief:
- The investment firm that bought Toys R Us' Canadian business is eyeing some of the toy retailer's stores in the U.S., according to a report in the Financial Post.
- Paul Rivett, president Fairfax Financial Holdings — which won court approval last week for its bid (worth about $236 million U.S.) to buy the Canadian unit — told the Post, "There's pieces now we can invest in, pods of stores in the U.S., or elsewhere, and utilize the fact that they've got all the systems in Canada." An official with Fairfax did not immediately respond to Retail Dive's request for comment.
- Meanwhile, MGA CEO Isaac Larian, who had also made a bid for the Canadian unit that included hundreds of U.S. stores — is still interested in buying and operating some domestic Toys R Us stores after losing his bid. Larian said in a statement emailed to Retail Dive that he was "happy" about bids for Toys R Us' Canadian, European and Asian units adding, "This is excellent news for the toy industry, and inspires me and my investors to continue the fight to save Toys R Us in the U.S."
Dive Insight:
Toys R Us' fate in the U.S. is still up for grabs.
Fairfax's reported interest in snatching up some of the liquidating retailer's stores in its home country likely increases the chances that some piece of Toys R Us will survive liquidation.
Larian had led the charge until now. Prior to making his own nearly $900 million bid to save Toys R Us Canada and more than 200 stores in the U.S., he had created a GoFundMe site to raise $1 billion to save the retailer in its home country. (The retailer was founded in the late 1940s in Washington, D.C., by Charles Lazarus, who, in a sad bit of irony, died shortly after Toys R Us went into liquidation.)
Larian, whose company makes Bratz dolls and L.O.L. Surprise! and owes some 20% of its sales to Toys R Us, nixed the crowdfunding effort last week. "I've decided to end the GoFundMe campaign and return all contributions so that I can focus my efforts on saving this American icon," he said in his statement. The funding campaign had only managed to raise a meager fraction of its lofty $1 billion, and was likely only ever meant as a marketing play.
Now Larian might have to again compete with Fairfax, this time in the U.S. That's good news for Toys R Us, which is selling off assets to pay off its debts (most of them due to a leveraged private equity buyout last decade) and has scrambled since filing for Chapter 11 to save its business.
In Canada, Fairfax presents an interesting owner for Toys R Us' operations there. Eric Matusiak, a partner with consulting firm BDO Canada, told Retail Dive earlier in April that the firm has invested funds from its insurance business into a "quiet" private equity company that seems focused on long-term investments. Fairfax has acquired an upscale sports retailer and a housewares seller, among others in the U.K., typically without advanced reports or talk of a future initial public offering, Matusiak said. He added that the retailer's best bet in the country would be to go further up market and turn some of the store space over to experience-based retail, such as a professional gaming venue.
Both Larian and Fairfax might have to compete against bids for the sum of Toys R Us' parts in the U.S. As we saw recently with Bon-Ton, liquidation bids can prevail over high-minded bids to save a retailer's business.
