NEW YORK (CNNfn) - Consolidated Stores Inc. said Wednesday that it will link up with privately held Web retailer BrainPlay.com to operate its KBToys Internet site, a deal that aims to capitalize on the growing online toy retailing business.
No cash will change hands in the deal, but Consolidated Stores (CNS) said it will invest $80 million in the venture. The existing BrainPlay.com Web site will become KBToys.com,
Consolidated also said it plans to offer shares in the new KBToys.com in a public offering at some point.
The new KBToys site will be owned 80 percent by Columbus, Ohio-based Consolidated Stores and 20 percent by BrainPlay.com. Operations will be based at BrainPlay's headquarters in Denver.
"This new venture heralds the beginning of the next phase of e-commerce," Consolidated Stores chairman and CEO William G. Kelley said in a statement. The matchup is strategic because the long-term winners in Internet retailing "will be those who combine the strengths of bricks-and-mortar retail leaders" with "the entrepreneurial environment of Internet startups," he said.
The venture will compete with two other online toy retailers: eToys, which recently delayed an initial public offering, and Toys "R" Us (TOY), which has set a goal of being the leading Web-based toy seller by the end of 1999.
Consolidated Stores operates a total of 2,477 stores offering toys and close-out merchandise. Besides its 1,324 KBToys stores, its other chains include Big Lots Furniture and Pic 'N' Save.
Shares in the company closed down 1/8 Tuesday at 33-13/16.