Last Updated on January 3, 2020 by Danielle
Toy executive’s $890 million bid for 274 U.S. stores in addition to Canadian operations has been rejected, as it failed to meet minimum threshold levels for the assets.
Billionaire toy executive Isaac Larian’s bid to salvage Toys R Us has been officially denied. According to reports, Larian’s bid of $890 million in exchange for 274 U.S. Toys R Us stores as well as the Canadian operations failed to meet the minimum established threshold, therefore it is considered to be an invalid bid.
The death of Toys R Us would deliver a major blow to the industry and could force many smaller companies out of business. According to Larian’s estimates, as many as 130,000 jobs would be impacted by the loss of Toys R Us. Toys R Us generated roughly 20 percent of MGA’s business, and it could result in job cuts at its Little Tikes plant. Additionally, Larian also has a personal motivation to preserve Toys R Us for his grandson’s generation as well as future Toys R Us kids. The demise of Toys R Us could potentially stifle innovation in the industry with the loss of a dedicated specialty toy retailer.
Toys R Us was a staple of American childhood and Larian had plans to transform it into a mini Disneyland – where kids could play and test out the latest playthings. Much like his L.O.L. Surprise dolls, he wanted it to be more experiential. But with the latest news, after Toys R Us’s liquidation, it could disappear forever.
Evidently, Larian hadn’t even been notified of the rejected bid. He said in a statement, “If this is true, it is very disappointing. It is our hope and expectation that we can continue to participate in the bid process, so we can keep fighting to save Toys R Us. We feel confident that we submitted a fair valuation of the company’s U.S. assets in an effort to save the business and over 130,000 domestic jobs.”
Last week Larian and partner investors offered $675 million for 274 U.S. Toys R Us stores and $215 for Canadian operations for a total bid of $890 million. According to insiders familiar with the matter, Larian’s bid wasn’t aligned with Toys R Us’s liquidated asset values. And Toys R Us, under bankruptcy law, bears the onus of maximizing its asset value to repay its debts to creditors.
Jim Silver, TTPM Toy Review Editor, stated: “It’s all about the dollars. The court has no emotional ties to the decision. It’s about the liquidated value.”
Isaac Larian is the CEO of MGA Entertainment, the company known for Bratz dolls, the latest collectible toy craze – L.O.L. Surprise! Dolls, and Little Tikes.
Just a few short weeks ago, Larian made headlines and was trending on social media with his GoFundMe crowdfunding campaign #SaveToysRUs. He had invested $100 million of his own personal funds along with $100 million from partners to jump-start a social campaign to save Toys R Us. Their goal was to reach $1 billion in funding. Larian later admitted he never expected to reach that goal and that it was a publicity stunt, as some had believed. Then just this week Larian announced this $890 million bid from his personal funds, partner investors, and bank financing.
Certainly it will be interesting to see how this story develops. Everyone wants to know what Toys R Us’s fate will be. American childhood could be changed forever and hundreds of thousands of jobs could be lost in the aftermath. There are still many lingering questions that require answers: Will Larian be able to counter-offer with another bid and offer the minimum acceptable bid? How much higher are Larian and his investors willing to go? Will there be other bidders who emerge? Only time will tell. Stay locked on ToyBuzz for all the latest breaking news as this story unfolds.
Source: USA Today
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