Pension Fund Sues to Halt "Toys" Deal

March 29, 2005 ( - A Pennsylvania iron workers union has gone to court to block the announced sale of the Toys "R" Us chain to a buyer's group for $6.6 billion, alleging the $26.75-per-share offer is "grossly inadequate and unfair."

The Iron Workers of Western Pennsylvania Pension and Profit Plans filed suit in Delaware Chancery Court, alleging that the deal price actually is “a substantial discount” from the retailer’s true value, which the suit said is enhanced because of the company’s real estate holdings and the worth of its Babies “R” Us division, according to a New report.

Toys “R” Us announced March 17 that it had agreed to sell the entire company to a buying group made up of Kohlberg Kravis Roberts & Co., Bain Capital Partners LLC and Paramus-based Vornado Realty Trust.

The pension plan’s suit also argues that Toys “R” Us should be required to release its fourth-quarter 2004 fiscal results. The release of those results, originally scheduled for March 17, was delayed, and has not yet been rescheduled. Without it, shareholders won’t be able to properly consider the merits of the deal, the pension fund claimed.

The lawsuit also demands information about any plans to offer employment to current Toys executives, or to place members of the current Toys board of directors on the board of the new, private company. According to the suit, there are conflicts of interest involving the Toys board, executives and investment advisors.

Toys operates 681 US  toy stores, 601 international toy stores and 218 Babies “R” Us stores.