Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Obtaining what some experts call a “category-killer” URL was serious business for the toy retailing giant. It purchased the domain name from The Parent Company during that company’s bankruptcy auction for $5.1 million, a consulting firm reports.
When it comes to operating a successful online business, a concise and explicit domain name can be worth quite a lot. That’s literally the case with Toys.com.
Toys ‘R’ Us Inc. recently paid $5.1 million at auction for the rights to Toys.com, according to Internet consulting firm DomainConsultant.com, which was on the conference call auction. Toys.com now redirects consumers to Toysrus.com.
The toy retailing giant, No. 43 in the Internet Retailer Top 500 Guide, wouldn’t formally confirm the price. “Toys ‘R’ Us has acquired the domain name, Toys.com, giving the company relative strength in the online search market for toys and juvenile products,” a company spokeswoman says. “Together with Toysrus.com, eToys.com, Babiesrus.com, babyuniverse.com and ePregnancy.com, the company now owns the top search results for its key businesses.”
Faculty Lounge LLC already had purchased the domain at an earlier auction for $1.25 million. Then a judge threw a monkey wrench in the works.
The story begins last month when Toys ‘R’ Us acquired the e-commerce properties of The Parent Company after The Parent Company filed for bankruptcy in late December. These properties included eToys.com, babyuniverse.com and ePregnancy.com.
The Parent Company also owned the domain name Toys.com. In November it launched Toys.com as a vertical search and comparison shopping site.
On Feb. 4, The Parent Company placed Toys.com on the block during a bankruptcy liquidation auction and Faculty Lounge placed the highest bid at $1.25 million.
“Upon learning of the sale, several parties stepped in to challenge the brokers and it ultimately went to the courts-which ruled another auction be held,” says DomainConsultant.com analyst Adam Strong. The second auction, held Feb. 27, involved three retailers-Toys ‘R’ Us, 1800Diapers Inc. (No. 231 in the Internet Retailer Top 500 Guide) and Beverly Hills Teddy Bear Co.-and three domain name buyers-Faculty Lounge, National A-1 and Schilling Aviation Corp. Toys ‘R’ Us came out on top.
While $5.1 million may seem high to some for a URL, Strong says Toys ‘R’ Us will get its money’s worth.
“This is great for long-term strategy-whether they make their money back in five years or 20, I don’t know,” he says. “But having a category-killer domain name is the best way to dominate and take control of a space, get the search engine rankings, and squeeze out your competitors.”