Toys.com sells for $5.1MM!
Pretty amazing news out of Wilmington, DE that Toys.com sold yesterday for $5.1MM to Toys R Us. At the initial auction on February 4, the bidding ended at $1.25MM and I was blown away at the poor execution by the attorney for TRU. He could have locked up the entire portfolio of domains (including Birthdays.com, eParties, Hobbies.com, Pinata.com, and numerous others), plus the eToys and Baby Universe businesses for millions less and not let a bidding war like this ever happen.
The format of the auction broke various assets into about a dozen “lots”. There was preliminary bidding on a lot-by-lot basis (I was bidding against TRU for eToys, with my own price reaching $750k), and later in the evening, there was a “multi-lot” auction when anyone could go back and bundle specific lots together and raise the price. It’s here where the TRU attorney missed the boat. He should have bundled everything except the “PoshTots” and “MyTwinn” assets, plus the lot that included all the unsold inventory, and put a price in the $3.75-$4MM range, and he’d have won. Instead they paid $7.25MM — $5.1MM for Toys.com + $2.15 for eToys, Baby Universe and ePregnancy.
This isn’t a “hindsight is 20/20″ kind of thing….At 2am, live from the attorney’s office, I voiced my disbelief at the strategy they were taking. I ultimately fault the Toys R Us management for sending an attorney to the auction alone instead of a business development person or other business-minded executive. Maybe $3MM is chump change to TRU and their private equity backers (KKR Group, Bain Capital and Vornado Realty Trust), but for an entrepreneur like me, it’s a glaring example of why the country’s in the state it’s in — bad management seems to be the rule, rather than the exception!