Smyths Toys has reached an agreement with US administrators to buy the Toys R Us businesses in Germany, Austria and Switzerland.
The biggest competitor to Toys R Us in the UK, Smyths Toys, will acquire the German, Austrian and Swiss arms of the bankrupt retailer. Up until now, Smyths has only operated in the UK and Ireland, but will become Europe’s largest toy retailer once the acquisition is complete. Final approval is yet to be made, but the deal is expected to go through.
Toy World provides details on the deal:
Smyths Toys will acquire Toys R Us’ operations in Germany, Austria and Switzerland, for a headline enterprise value of €80m, on a cash-free and debt-free basis, and an estimated aggregate purchase price of €79m, of which up to €37m may be escrowed at closing with release subject to certain conditions. The company’s Central European business, in fiscal year 2018, is forecast to generate Adjusted EBITDA of €22m, after International Technical and Administrative Support Service Agreement (ITASSA) expense of €5m and royalties of €13m. The sale of its Toys R Us’ Central European business is subject to the approval of the United States Bankruptcy Court for the Eastern District of Virginia.
“We started the business more than thirty years ago and are very grateful to our customers, our employees and our suppliers for the support we have received in that time,” said Tony Smyth, on behalf of Smyths. “We are convinced about the future of multi-channel specialist toy retail and are confident that we can successfully introduce and grow our brand in Continental Europe. The Toys R Us business is profitable, has a strong leadership team and already has many loyal customers. It provides a great starting point for our expansion.”
“After an extensive sales process, my colleagues and I are pleased that Smyths Toys has won the bidding process for our business. Smyths Toys is a proven leader in the retail industry,” Detlef Mutterer, managing director of Toys R Us Central Europe, said. “It has achieved strong growth in recent years and will complement our business in an ideal way. We look forward to working with our new colleagues, responding to customers and growing the business further. We already have many suppliers in common and we see this as good news for the supplier community and our other business partners.”
Toys R Us stores in the UK have continued to close in recent days, while Toys R Us in the US are holding liquidation sales.