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Are 400 Toys R Us Asia stores to be sold?

Published on: November 8th, 2018

An article on Law360 by Alex Wolf suggests that Toys (Labaun) Holding is looking to obtain an 85% equity interest in the company. 

The article, entitled “Toys R Us Poised to Sell Asian Business to Debt Holders”, states:

“Lawyers for Toys R Us told the [bankruptcy] judge the company would seek his approval next week to sell its 85 percent equity interest in Toys (Labuan) Holding Ltd., which comprises the retailer’s business across Japan, China and Southeast Asia. According to court documents, the stalking horse bidder has committed to acquire the Asia joint venture with a combination of a $300m credit bid and cash.”

In an article published yesterday (7th November), global toy expert Richard Gottlieb stated: “This is notable because there has been an ongoing struggle between Toys R Us and Li & Fung over the latter’s attempts to buy the Asian holdings. If you are unfamiliar with the conflict you may want to read two prior articles on the subject: “Toys R Us Asia; What’s In a Name? We’re About to Find Out” and “The Battle for Toys R Us Asia“.

The article continued: “If you don’t have time to read the earlier articles, here is a very brief synopsis:¬†Prior to the bankruptcy, Toys R Us and Li & Fung jointly owned Toys R Us Asia with the latter owning 15% of the shares. Li & Fung has been attempting to purchase the other 85%. Toys R Us has been concerned that the price Li & Fung was willing to pay under auction would be too low. As a result they have been attempting to block Li & Fung’s efforts.

Now, we learn that Toys (Labuan) Holding Ltd. is making the purchase. But who exactly is Toys (Labuan) Holding Ltd.?

According to Bloomberg:

Toys (Labuan) Holding Limited operates and manages, under licence, the Toys R Us chain of stores in nine Asian markets in Greater China and Southeast Asia. It offers toys and children’s products through the retail stores. The company was founded in 2011 and is based in Hong Kong. Toys (Labuan) Holding Limited operates as a subsidiary of Toys R Us Inc.

I have checked with sources in China and there does seem to be a connection between Toys (Labuan) Holding Ltd. and Li & Fung. So, at this point, if the sale goes through, it seems that Li & Fung will be the new owners of Toys R Us Asia. More news about this as I learn it.”

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