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Bloomberg
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 $237 million.
The so-called stalking horse bid allows other potential buyers were expected to enter competing proposals, according to a US bankruptcy court filing submitted by Toys ‘R’ on Thursday. 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 3 percent if another bidder is chosen.
After the takeover, Fairfax would be able to continue operating Toys ‘R’ Us stores in Canada under the existing name. 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.
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. The Wayne, New Jersey-based company filed for bankruptcy in September, hoping to shed debt and turn around the business.