Exhibit 3
CONTACT:
Lawrence A. Rand Louis Lipschitz Jodi Taylor Naomi Rosenfeld
Kekst and Company Toys "R" Us, Inc. Baby Superstore, Inc. Morgan Walke
437 Madison Ave. 461 From Road 1201 Wood Chapel Rd. 380 Lexington Ave.
New York, NY Paramus, NJ Duncan, SC New York, NY
(212) 593-2855 (201) 388-5548 (864) 968-9292 (212) 850-6600
FOR: Toys "R" Us, Inc. Baby Superstore, Inc.
FOR IMMEDIATE RELEASE
TOYS "R" US TO ACCELERATE EXPANSION OF ITS NEW BABIES "R" US
DIVISION THROUGH STRATEGIC ACQUISITION OF BABY SUPERSTORE
PARAMUS, NEW JERSEY AND DUNCAN, SOUTH CAROLINA, OCTO-
BER 2, 1996 -- Toys "R" Us, Inc. (NYSE: TOY) and Baby Super-
store, Inc. (NASDAQ: BSST) today announced the execution of a
definitive Merger Agreement pursuant to which Toys "R" Us will
acquire Baby Superstore, Inc. in a tax-free exchange of shares
valued at approximately $376 million, based upon the closing
price of Toys "R" Us stock as of October 1, 1996. Under the
terms of the Agreement, Baby Superstore shareholders will re-
ceive .8121 of a share of Toys "R" Us stock for each Baby Su-
perstore share, valued at $23.45 as of the close of business on
October 1, 1996. Jack Tate, founder, Chairman and Chief Execu-
tive Officer of Baby Superstore, will receive .5150 of a share
for each Baby Superstore share, valued at $14.87 as of close of
business on October 1, 1996. The Merger, which has been ap-
proved by both Boards of Directors, is subject to customary
regulatory approvals and approval by Baby Superstore sharehold-
ers.
Michael Goldstein, Chief Executive Officer of Toys
"R" Us, said that "this transaction is another important step
in our long range strategic business plan to become the leading
retailer in the infant-through-toddler marketplace. Through
the excellent strategic fit of this acquisition, we will be
able to accelerate our planned growth in sales and profitabil-
ity of Babies "R" Us, our new format that is already exhibiting
exciting growth potential."
Through its acquisition of Baby Superstore, which is
the leading operator of infant and toddler superstores, Babies
"R" Us emerges as the sector's leading specialty store operator
with 73 stores in 23 states generating sales in excess of $450
million in 1996. "The Company expects the combination of these
two businesses will provide significant synergies to both busi-
nesses, including lower costs and economies of scale," Mr.
Goldstein said.
Commenting on the announcement, Mr. Tate said, "This
transaction will combine the well-established Baby Superstore
concept with the tremendous financial, operational and market-
ing resources of Toys "R" Us, to create retailing leadership in
the baby and toddlers' products segments.
"As an indication of my confidence in the potential
of the combined company, of which I will be the single largest
individual shareholder, I have agreed to accept a reduced ex-
change ratio for my stock, as compared to that paid to all
other shareholders. Not only will this help to facilitate a
transaction of which I have been a strong proponent, but it
will also enhance the returns for the remaining shareholders,
as well as for those associate option-holders who have helped
grow Baby Superstore over the years."
Mr. Goldstein further stated that "we are excited
about the opportunity to apply our vast operational experience
and our strong financial and management expertise to the Baby
Superstore business. We are also pleased to welcome the Baby
Superstore associates into the Toys "R" Us family. Their
knowledge and experience in the juvenile market will enhance
our prospects to build this business in the future. In addi-
tion, by immediately increasing our presence in the infant/
toddler market, we will be best positioned to capitalize on the
natural synergies inherent among our Babies "R" Us, Toys "R" Us
and Kids "R" Us businesses. As a result, we expect this acqui-
sition to provide incremental sales and earnings growth to Toys
"R" Us, immediately following consummation of the transaction."
The transaction is anticipated to close around the
end of the companies' fiscal year at the end of January. Mr.
Tate, holder of approximately 46.8% of Baby Superstore common
stock, has entered into an agreement to vote his shares in fa-
vor of the merger.
Goldman, Sachs & Co. served as financial advisors to
Toys "R" Us for purposes of this transaction. CS First Boston
and Invemed Associates, Inc. served as financial advisors to
Baby Superstore for purposes of this transaction.
Baby Superstore, Inc. is a leading large format re-
tailer of baby and young children's products in the United
States. The Company currently operates 70 stores in 21 states.
Toys "R" Us is the world's largest retailer of chil-
dren's products currently operating 651 toy stores in the Unit-
ed States, 366 international toy stores, including franchise
stores, 211 Kids "R" Us children's clothing stores and three
Babies "R" Us stores.
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