Amazon to Pay $51 Million to Toys "R" Us to End Long-Standing Dispute

Strategic Insights -

A long-standing legal dispute between online retailer Amazon.com Inc. and toy seller Toys "R" Us Inc. has finally come to an end, with Amazon agreeing to pay $51 million in settlement. The dispute, which began in 2004, was over a partnership that gave Toys "R" Us exclusive rights to supply some toy products on Amazon's site. The settlement, reached just two months after a New Jersey appeals court ruled in favor of Toys "R" Us, will take the place of a court award and will be paid in the third quarter, which begins July 1.

Key Takeaways:

  • Amazon will pay $51 million to Toys "R" Us to end the dispute, which was over a partnership that gave Toys "R" Us exclusive rights to supply some toy products on Amazon's site.
  • The dispute began in 2004 and was over Amazon's alleged breach of the partnership agreement.
  • The New Jersey appeals court ruled in favor of Toys "R" Us in May, allowing the company to pursue damages.
  • The settlement will take the place of a court award, which was initially sought by Toys "R" Us for damages of approximately $93 million, including interest.
  • The payment will be made in the third quarter, which begins July 1, and will be charged to operating expenses in the second quarter.
  • The settlement comes two years after a lower court judge allowed the companies to end their online partnership early, but declined to award either party damages.

Statistics:

  • $51 million: The amount Amazon will pay to Toys "R" Us to end the dispute.
  • 2004: The year the dispute began.
  • 2006: The year a lower court judge allowed the companies to end their online partnership early.
  • 2010: The year the partnership would have originally ended.
  • $93 million: The amount of damages, including interest, initially sought by Toys "R" Us.
  • 45 days: The time frame in which the payment is due, as specified in the settlement agreement.

Sources:

  • "Amazon.com Inc. agrees to pay $51M to settle Toys 'R' Us lawsuit" (The Associated Press)
  • "Amazon Pays $51 Million to Settle Toys 'R' Us Suit" (The New York Times)
  • Securities and Exchange Commission filing by Amazon.com Inc. (SEC Filing)
  • Securities and Exchange Commission filing by Toys "R" Us Inc. (SEC Filing)