D.E. Shaw Affiliate Acquires Online Assets of KB Toys

New York-based investment and technology private equity firm D. E. Shaw group, which purchased the assets of FAO Schwarz in January, has struck again. Its subsidiary, D. E. Shaw Laminar Portfolios acquired the online assets of KB Toys for approximately $7.4 million in cash, plus a minimum royalty payment to KB Toys of $500,000 per year for the next three years. The new company will be named eToys Direct. The acquired assets include the inventory, equipment, leases, and proprietary technology of KB Online Holdings as well as eToys trademarks, URLs, and associated intellectual property.

Former members of KB Online Holdings senior management, including Michael J. Wagner, will hold a significant minority equity stake in the new company, eToys Direct, formed to own and operate the acquired assets. Wagner will be the CEO of eToys Direct, which will be headquartered in Denver.

eToys Direct will own and operate the eToys Website and a 650,000 sq.- ft. fulfillment facility in Blairs, VA, and will continue to operate the KBtoys.com Website under a long-term licensing agreement with KB Toys. eToys Direct will also continue to provide merchandise, order fulfillment, and customer service to other online and catalog retailers through its various retail alliances.

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