Softbank backs Toysrus.com

Softbank Corp. has agreed to pump $57 million into Toys R Us Inc.
Written by Margaret Kane, Contributor on

Softbank Corp. has agreed to pump $57 million into Toys R Us Inc.'s online unit, the companies said today.

Softbank Venture Capital and Softbank Capital Partners, the investment arms of the Japanese Internet giant, will get an undisclosed stake in the e-commerce venture. They will also get warrants to purchase an additional 1.2 million shares of Toys R Us (NYSE: TOY). Softbank Venture Capital Managing Director Rex Golding will join the board of directors of Toysrus.com, and Gary Rieschel, executive managing director of Softbank Venture Capital, will serve as observer.

Softbank is a major investor in Ziff-Davis Inc. (NYSE: ZDZ).

Toys R Us launched the online division last year as a partnership with Benchmark Capital. But the venture capital firm eventually walked away from the deal, amid growing concerns about the site's performance vs. Internet pure-plays such as Amazon.com and eToys.com.

Indeed, the site continued to struggle through last year's holiday season, facing issues with traffic and with the ability to deliver products on time. The latter problem resulted in lawsuits against the company.

But consumers evidently brushed those concerns aside, and Toysrus.com emerged from the holidays as one of the most popular e-commerce sites. According to research firm Media Metrix, the site was the fifth most popular e-commerce site during the holiday period.

The Blackstone Group, KKR & Co. and Evercore Partners have also agreed to minor strategic investments in Toysrus.com, the company said.

In a separate move this week, a group of investors led by Softbank has been given the rights to acquire Nippon Credit Bank, one of the largest banks in Japan.

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