To resolve Toys ‘R’ US suit Amazon give $51 million
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Amazon.com will give Toys “R” Us $51 million to resolve a lawsuit filed by the toy retailer in May 2004.
Toys “R” Us sued Amazon for violate the terms of the 10year partnership the companies copied in 2000. Toys “R” Us claimed Amazon violated the agreement by allowing other vendors to market toys and baby products on its site.
Amazon said in a document filed with the Securities and Exchange Commission on friday that the money must be paid in the third quarter of 2009 and that the sum was “unanticipated.”
After Toys “R” Us filed its original claim, Amazon filed a counterclaim as well as an official request to expire the partnership.
The retailer asked for $750 million in compensation and claimed the toy retailer failed to meet its end of their bargain. Toys “R” Us, according to Amazon, was unable to meet demand for top-selling toys, games, and baby products, especially during the holidays.
The court entered a decision favoring Toys “R” Us that terminated the contract in 2006
The two companies joined forces during the dot-com era, after Toys “R” Us stumble badly trying to build an online franchise. The toy huge turned to Amazon, agreeing to pay the retailer a $200 million premium for special rights to sell toys and baby items through its site.
A spokeswoman for Toys “R” Us declined to comment.
Imran Khan, a J.P. Morgan analyst, lowered his second quarter forecast for Amazon but said “We do not see the settlement as representing anything other than a one-time item,” Khan wrote in a note sent Friday afternoon. “We believe Amazon’s continued market share gains justify the stock’s premium valuation.”
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