IRISH TOY STORE CHAIN Smyths has agreed to pay almost €80 million to buy the German, Austrian and Swiss operations of bankrupt American firm Toys R Us.
The US company, once the largest toy seller in America, announced that it has entered into a “definitive agreement” with Smyths Toys Superstores to sell over 90 central European outlets and four online stores as part of the group’s US liquidation.
In a note published on its website, Toys R Us said the two parties agreed an estimated purchase price of €79 million.
Some €37 million of that sum may be put into an escrow account “with release subject to certain conditions”, it said.
The deal is subject to the approval of the United States Bankruptcy Court for the Eastern District of Virginia.
Family-owned Smyths intends to rebrand the dozens of outlets under its own name, signalling its first move into the mainland European market. The toy store chain currently operates more than 100 shops in Ireland and the UK.
Toys R Us said the central European business is forecast to generate adjusted EBITDA – earnings before interest, taxes, depreciation, and amortisation – of €22 million this year after paying an IT-related expense of €5 and a €13 million royalties bill.
Toys R Us recently scrapped a plan to exit bankruptcy in the US. In February, the group’s British wing collapsed into insolvency after failing to find a buyer, putting some 3,000 jobs at risk.
Founded over three decades ago, Smyths is co-owned by brothers Tony, Tommie, Padraig and Liam Smyth.
Due to its unlimited status in Ireland, Smyths annual accounts aren’t publicly available. However, its UK operations reported a £10 million pre-tax proft in 2016 and sales of over £396 million, a £62 million increase on 2015′s tally.
It has been widely reported that if the Toys R Us deal is approved, the Smyths’ group annual revenue will hit the billion-euro mark, making the toy chain Ireland’s second largest privately-owned retailer after Dunnes Stores.