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Toys 'R' Us gets Web boost
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February 24, 2000: 12:11 p.m. ET
Softbank invests $57 million in retailer's Web site; other firms also buy stake
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NEW YORK (CNNfn) - Toys "R" Us Inc. (TOY: Research, Estimates) Thursday announced that Japanese venture capital firm Softbank Capital Partners will invest $57 million for a minority interest in the chain's Web site, Toysrus.com.
The money will be used to develop the Paramus, N.J.-based toy retailer's Internet site, which suffered widely publicized difficulties fulfilling toy orders during the holiday season as it handled an overwhelming number of orders.
Additionally, Softbank purchased warrants for $10 million to acquire 1.2 million shares of Toys "R" Us common stock at $13 per share. Rex Golding, managing director of Softbank Venture Capital, will join the Board of Directors of Toysrus.com, and Gary Rieschel will serve as an observer.
Toys "R" Us also announced minor strategic investments in its Web site by The Blackstone Group, KKR & Co., and Evercore Partners. Toys "R" Us did not disclose the amount of any of these investments, however.
Toys "R" Us has been struggling with competition from other toy retailers, such as eToys.com and Amazon.com.
"We believe that this is an extraordinary long-term business opportunity," said Rex Golding, managing director of Softbank Venture Capital. "Toysrus.com has all the right ingredients - a great new management team, a powerful brand name, international presence, and bricks and mortar assets."
Toys "R" Us shares were down 1/8 to 11-3/8 in late-morning trading Thursday. 
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