THE stakes were raised in the $3.5 billion (£1.8 billion) auction of Toys ’R’ Us yesterday when one of the bidders tried to barge out rivals with an offer for the toy chain’s parent company.

Kohlberg Kravis Roberts, the US private equity firm, is believed to have tabled the bid for the retail group, which has a market value of about $5 billion and an enterprise value of about $6.4 billion.

The approach prompted Credit Suisse First Boston, the investment bank advising Toys ’R’ Us on its sale, to ask all bidders on the shortlist to rethink their offers. The parent company, also called Toys ’R’ Us, owns the more successful Babies ’R’ Us chain, which has an estimated value of $2.5 billion.

Until now, the management of the New York-listed company has insisted it is committed to splitting off its toy chain, which has struggled to compete with aggressive price cutting from retail giants such as Wal-Mart.

The board met on Monday to discuss second round bids for the toy division, but was unavailable to comment yesterday on whether it would consider a bid for the entire company.

Aside from KKR, the bidders are Bain Capital and Vornado Realty Trust, the private equity firm and its property investor partner; Apollo Advisors, the US private equity firm and its partner Permira, the UK-based private firm which is thought to be working with National Realty, the property investor; and Cerberus Capital Management, another US private equity firm which is understood to be working with Kimco Realty Corp, the US property firm, Schottenstein Stores, the retail investor and Goldman Sachs Group.

Sources close to the auction said the bidders had been asked to submit new offers in the next couple of weeks. However, they are thought unlikely to bid for the entire group. KKR is believed to be the only one that intends to run the US arm of Toys ’R’ Us as a going concern.

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