L.A. toy mogul’s $675 million bid for nearly 300 Toys R Us stores said to be rejected as too low

The $675-million bid Los Angeles toy mogul Isaac Larian submitted last week to buy hundreds of Toys R Us stores slated for closure has been rejected because it was “way off” in valuing the stores and associated assets, according to a person familiar with the matter.

Larian submitted the bid last week in hopes of buying 274 of the retailer’s 735 U.S. and Puerto Rican stores, which serve as a key sales channel for his MGA Entertainment Inc., the maker of Bratz dolls and the hit L.O.L. Surprise! toys. He also is offering $215 million to acquire 82 Canadian stores.

Toys R Us filed for Chapter 11 bankruptcy protection in September, and is in the midst of a liquidation and asset auction overseen by the U.S. Bankruptcy Court in Virginia.

Larian submitted his bid directly to the retailer’s bankers, but it was turned down because it was “well below the value of the assets he was proposing to purchase,” the person said on Tuesday. The assets included not only the U.S. stores but the retailer’s intellectual property.

Larian, in a statement, said that he had not yet been notified that his bid was rejected, but that he now planned to continue pursuing the stores through the formal bankruptcy process.

“It is our hope and expectation that we can continue to participate in the bid process, so we can keep fighting to save Toys R Us. We feel confident that we submitted a fair valuation of the company’s U.S. assets in an effort to save the business and over 130,000 domestic jobs,” the statement said.

Money for last Friday’s bid came from Larian personally, investors and bank financing. MGA said the company did not participate in the financing.

A crowdfunding campaign that he had began March 21 to help fund the bid had only raised about $59,500 from more than 1,970 people as of Friday – on top of $100 million that Larian personally pledged and another $100 million from other undisclosed large investors.

Larian said last week that he does not plan to use any of the funds pledged by small donors through a GoFundMe campaign.

Larian said he had hoped to secure ownership of the stores quickly because the retailer is now liquidating. “Every day that goes by, the value of Toys R Us declines and more people lose their jobs,” he said.

Larian has said that the 130,000 U.S. jobs at risk include not only at Toys R Us but also at suppliers, distribution centers, trucking companies and other firms tied to the retailer. They include MGA’s Little Tikes plant, which makes children’s wagons, furniture and other toys, in Hudson, Ohio, which employs 1,200 and sells 40 percent of its products through the retailer.

Toys R Us filed for Chapter 11 after suffering falling sales for years as Amazon and other online competitors ate into its business. It also was saddled with $5 billion of debt stemming from its 2005 buyout by a trio of investment firms that took the company private.

Larian is not the only bidder for Toys R Us.

An attorney for the retailer said in Bankruptcy Court last week that it has received multiple bids topping $1 billion for its Asia stores. Larian previously told The Times that he is not interested in acquiring stores outside North America and instead wants to focus on the U.S. and Canada.

Larian has not been specific about his plans, but over the last several weeks he has said he wants Toy R Us to be as interactive and as kid-friendly as a theme park – a place where children can play and try out new toys.