Toys R Us is owned by Bain Capital and Kohlberg Kravis & Roberts. TRU has announced it is acquiring F.A.O. Schwarz, a company whose primary assets consist of two retail leases [NYC, which expires in 2012 and is being shopped around this very minute, and Las Vegas], a toy warehouse, a domain name, and whatever Big-related warm feelings towards Tom Hanks were left in Americans' hearts after Turner & Hooch and the launch of the Bubba Gump Shrimp Company. "There's not a kid or an adult alive that doesn't remember Tom Hanks in 'Big' at F. A. O. Schwarz," FAO CEO Gerald Storch actually said. The price was not disclosed.
- F.A.O. Schwarz was founded in Baltimore in 1862 as the Toy Bazaar by Frederick August Otto Schwarz. It was renamed F.A.O. Schwarz after the New York location opened in 1870.
- It moved to the southeast corner of 5th and 58th st, where Bergdorf Men's is, at the height of the [First] Depression, in 1931.
- The Schwarz family sold the company to Parents' Magazine in 1963.
- Parents sold it to W.R. Grace in 1970.
- W.R. Grace sold it to Franz Carl Weber International of Zurich, Switzerland in 1974.
- In 1985, Alan Patricof's brother-in-law, a commercial real estate broker at Chemical Bank named Dennis Hatkoff, offered to help F.A.O. Schwarz sell its way-below-market lease back to the landlord, Christiana Companies, a subdivision developer in San Diego.
- Instead, Weber ended up selling the entire company to Christiana for $4 million in August.
- Christiana promptly moved F.A.O. Schwarz across the street to the GM Building, and then sold it to the Christiana-appointed CEO, former discount retail executive Peter Harris and investor Peter Morse in April 1986.
- Morse and Harris sold it to NV Koninklijke Bijenkorf Beheer, a Dutch retail conglomerate, in 1990.
- NV Koninklijke Bijenkorf Beheer and F.A.O. were sold to Vendex BV, another Dutch retail conglomerate, in 1998.
- After a too-rapid expansion, Vendex put F.A.O. Schwarz into bankruptcy in 2000.
- Vendex then sold 23 of its 42 stores to The Right Start in 2001.
- The Right Start and F.A.O. declared bankruptcy again in 2003.
- The hedge fund D.E. Shaw bought F.A.O. Schwarz's brand and current operations out of bankruptcy in February 2004 and reopened the two current stores in November 2004.
- F.A.O. Schwarz acquired Best & Co. in 2007.
- The first of 250 planned in-store F.A.O Schwarzes opened in Macy's Chicago in September 2008. If any more of those were opened before the retail market evaporated, they will all be closed.
Which all is just a long way of saying that every day for the last 21 years, the only reasons for F.A.O. Schwarz's continued existence have been a couple of real estate deals and a steady supply of bigger retail fools to hold the bag.
And Tom Hanks. Because as soon as the Fifth Avenue lease gets bought out, TRU will try to morph FAO into a premium in-house brand, where the only giant piano playing is in your head.