Fairfax Makes $300 Million Bid for Toys 'R' Us Canadian Stores

By Lillian Rizzo and Patrick Fitzgerald

Canada's Fairfax Financial Holdings Ltd. has offered to buy Toys "R" Us's Canadian stores out of bankruptcy for $300 million.

The offer, revealed Thursday night in filing in U.S. Bankruptcy Court in Richmond, Va., is subject to higher bids at a court-supervised auction.

The retailer is seeking court approval to name Fairfax, the Toronto-based investment firm controlled by financier Prem Watsa, as the stalking horse, or lead bidder, at the auction. Companies selling assets in bankruptcy often seek to name a stalking horse to set a floor price to encourage bidding.

An auction for the retailer's Canadian assets is scheduled to be held Monday in New York at the offices of Toys "R" Us's bankruptcy lawyers. A sale hearing is slated for Tuesday.

Earlier this week, Toys "R" Us Inc. rejected an 11th-hour offer from a billionaire Isaac Larian, the founder of Bratz dolls maker MGA Entertainment Inc. Mr. Larian, who said he'd made a $675 million bid for the bankrupt retailer's U.S. stores, had also bid $215 million for the retailer's better-performing Canadian operations.

In March, Toys "R" Us announced it would wind down its U.S. business after it became apparent the retailer would be unable to reorganize its debt and move forward. The retailer, which employs about 33,000 people in the U.S., is in the process of liquidating all of the inventory at its 735 stores.

Toys "R" Us filed for bankruptcy protection in September after struggling with more than $5 billion in debt from a leveraged buyout. It also was squeezed by competition from Amazon.com Inc. as more parents shop online, as well as by discount retailers such as Walmart Inc.

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com and Patrick Fitzgerald at patrick.fitzgerald@wsj.com

(END) Dow Jones Newswires

April 20, 2018 10:14 ET (14:14 GMT)

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