Children’s books publisher Scholastic Corp., New York, has abandoned its bid to purchase failed Internet retailer eToys Inc.’s inventory despite earlier news it had won a contingent auction for the inventory.
The purchase “did not meet Scholastic’s threshold for accelerating or reducing the costs of its Web initiatives,'” the company said in statement.
Scholastic had won an auction for the inventory with an offer of 30 cents on the dollar, or about $8 million. The inventory bid was contingent on Scholastic winning an auction for other eToys assets to help it meet its Web initiative goals.
Scholastic had considered buying the assets as a way to quickly develop a site featuring learning materials, books, videos and CD-ROMS. EToys’ assets are being sold in lots that include its two distribution centers, computer hardware, office equipment, software and other items.
As of Dec. 31, 2000, Los Angeles, CA-based eToys had sold products to nearly three million customers, according to court documents. The disposition its customer file is unclear as bidding continues. A second auction is expected to take place Thursday when bidders have the opportunity to acquire ownership of the entire company or make individual bids on its distribution centers, computer hardware, software, office equipment and other items, according to news report.
On March 2, Johnson & Johnson, New Brunswick, NJ, purchased eToys BabyCenter Inc. operations for an all-cash transaction valued at approximately $10 million. The acquisition included three Web sites: www.babycenter.com, www.parentcenter.com and BabyCentre.co.uk.
EToys filed for Chapter 11 bankruptcy protection March 7 in the U.S. Bankruptcy Court in Delaware following its inability to secure a merger or acquisition deal. The company had said it would close its Web site after collapsing under a heavy debt load and a weak holiday selling season. Court papers listed the company’s assets at $416.9 million and debts of $285 million.
The company was founded in 1996 by Toby Lenk, a former Walt Disney Co. executive, and never made a profit from its sales of toys, video games, software, videos and music for children, reports said.
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