May 13, 2008 / 1:10 PM / in 10 years

Toys "R" Us to take control of Japan operations

TOKYO, May 13 (Reuters) - U.S. toy retailer Toys “R” US Inc said on Tuesday it would take control of its Japanese unit, Toys R US-Japan Ltd 7645.Q, by buying about $32 million worth of shares from McDonald’s Holdings Co (Japan) 2702.Q.

The deal arose out of Toys R US-Japan agreeing to pay 2 billion yen ($19.3 million) to settle a lawsuit with McDonald’s Holdings over a contract under which it had paid the hamburger chain a percentage of its sales for business advice.

After ending that contract, McDonald’s Holdings, which is Japan’s largest fast-food chain and about half owned by McDonald’s Corp (MCD.N) of the United States, wanted to unload its 13 percent stake in Toys R US-Japan.

A wholly-owned investment vehicle of Toys “R” US Inc said it would launch a tender offer to buy that stake, spending about 3.3 billion yen to boost its holding in the Japan unit to about 61 percent from 47.76 percent.

It will offer 729 yen per share, or 3 percent below Tuesday’s close of 754 yen, and did not set an upper limit on how many shares it will buy.

That leaves an outside chance the tender could lead to a delisting of the unit, although that is unlikely to happen since the offer is at a discount to the market price, a spokesman for Toys R US-Japan said.

Toys “R” Us Inc is owned by a consortium that includes Kohlberg Kravis Roberts & Co [KKR.UL], Bain Capital and Vornado Realty Trust (VNO.N).

Toys R US-Japan runs 168 stores in Japan.

(Reporting by Mariko Katsumura and Nathan Layne; Editing by David Holmes)

((mariko.katsumura@thomsonreuters.com; +81-3-6441-1811; Reuters Messaging: mariko.katsumura.reuters.com@reuters.net)) Keywords: TOYSRUS/JAPAN

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