Saturday, December 11, 2004

Spinning Toys

Barrons this morning reported that Toys R Us (TOY) may be spinning off its Babies R Us division sooner than expected. The ailing retailer has been in the dumps ever since Target and Walmart began selling the same toys for less, as they are notorious for doing. Babies R Us, Barrons reported, could fetch for $11-12 a share post-breakup. Toys R Us stock is currently stuck at $20. As a simple sum of the parts is greater than the whole calculation would suggest, we could be seeing a $24 stock should the deal take place...Keep on eye on this one--I think the floundering toy co. will be bought out by a private equity firm like Vornado or Cerberus as a real estate play before the rumored spin off. Recall that real estate for lack of a better term was precisely the thinking behind Eddie Lampert's Sears/KMart merger.

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