Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
The deal will give Softbank and other investors, Evercore Partners and the Blackstone Group, a stake of approximately 20% in the toy retailer. The investment deal follows a rocky holiday season at Toysrus.com and the company's earlier falling out with its original venture capital partner, Benchmark, over ownership issues.
Toysrus.com suffered one of the most highly public setbacks during the 1999 holiday season, when it announced it would not be able to deliver all its orders by Christmas. The company gave affected customers $100 rebate checks as compensation, but that wasn't enough for one angry customer, who is attempting to rally other customers for a class action suit against the company. Earlier in the shopping season, the site was mobbed by traffic as a result of promotional mailings and was unable to admit new customers for a hours at a time.