Fairfax agrees to buy Toys ‘R’ Us Canada in $300 million stalking horse bid, source says
Fairfax Financial Holdings Ltd., the investment firm run by billionaire Prem Watsa, signed an agreement to buy the Canadian unit of Toys “R” Us Inc. for about $300 million, a person familiar with the matter said.
The so-called stalking horse bid allows other potential buyers to enter competing proposals by Monday, the person said, asking not to be identified because the matter is private. Fairfax would then have the option of either increasing its offer or walking away. Under the terms of the deal, Fairfax would receive a break fee of about 4 per cent if another bidder is chosen, the person said.
After the takeover, Fairfax would be able to continue operating Toys “R” Us stores in Canada under the existing name, the person said. The deal would follow a Fairfax-backed consortium’s purchase of athletic equipment maker Performance Sports Inc. last year, a process that was also overseen by a bankruptcy court.
Earlier this week, Toys “R” Us turned away an offer from the founder of MGA Entertainment Inc. to keep some of its North American stores open, a person familiar with the matter said at the time.
A representative for Fairfax and a representative for Toys “R” Us in Canada didn’t immediately respond to requests for comment outside of regular business hours. The Globe and Mail reported the deal with Fairfax earlier Thursday, citing an unidentified person.
The Wayne, New Jersey-based company filed for bankruptcy in September, hoping to shed debt and turn around the business. After dismal sales during the holiday season, it opted instead to liquidate its U.S. operations and try to sell its Canadian business.