Toy Sale... and other items of M&A news

Weekly Corporate Growth Report, Aug 16, 2004

Toys 'R' Us Looks to Sell

Famous toy retailer Toys 'R' Us has announced that it is exploring a possible spinoff for its Babies 'R' Us division and that the company may also leave the toy business altogether, selling off its global toy business.

The toy company's board has approved operating the two divisions as seperate entities within the company's existing corporate structure, a move that will make it easier to seperate Babies 'R' Us into its own company.

Toys 'R' Us, once the leading name in toy stores, is facing serious competition from Wal-Mart and other discount outlets. The situation illustrates how the rise of large discount chains, originally thought to be a threat to small business retailers, now threatens large national retail chains. If the toy operations are sold, the company would focus on the baby supplies business, a fast-growing niche that has eluded major competition from discount chains.

Japanese Bank Merger Approved by Court

A Japanese high court reversed a lower court decision blocking the merger of banking giants UFJ Holdings and the Mitsubishi Tokyo Financial Group. The merger talks had been contested by Sumitomo Trust, which had an earlier agreement with UFJ. Following the high court decision, Mitsubishi and UFJ reached a basic merger agreement and intend to proceed with their deal, creating the world's largest bank.

Google's IPO Offering Will Not be Simple

Google is making its initial public offering as an auction in which potential buyers place bids with brokers in hopes to acquire shares of the famous Internet portal. The auction procedure is complicated by different guidelines set up by Google's various underwriters. While most underwriters are allowing multiple bids, some, including Charles Schwab & Co. and Fidelity Capital Markets, are limiting investors to a single bid. Other firms, such as Harrisdirect, are requiring bids for a minimum number of shares.

The varying rules suggest that some investors may have an unfair advantage in acquiring shares. A Citigroup investor could place several bids at different price levels, for example, while an investor with Charles Schwab would have only one chance to get the bid right.