Toys R Us has agreed to acquire arts and crafts retail brand Riot, expanding the toy company’s product offering and bolstering its position in the e-commerce space.

“We’re merging Riot’s product range and passionate customer base with our cutting-edge e-commerce platform, creating a powerhouse for innovation, creativity and inspiration,” said Penny Cox, Toys R Us CEO since August last year.

“This acquisition expands our product portfolio and strengthens our competitive position within the online retail sector.”

Riot has about 540,000 retail and 2400 wholesale customers, complementing Toys R Us’ network.

Toys R Us has also secured up to $5 million of funding from US-based investment fund Mercer Street Global Opportunity Fund II LP.

“The placement funds, the loan, and initial funding under the convertible securities enable us to continue our transformation strategy,” Cox said.

“As US holders now represent approximately 18.5 per cent of our share register, with US-based Mercer coming onboard, it highlights the international strength of the Toys R Us brand. Following the successful resurgence of Toys R Us in the US, we’re working tirelessly to replicate this in Australia.”

In addition, Cox will invest $100,000 into Toys R Us through a convertible loan.