Shares of Toys R Us. Inc. (TOY) rose more than 2 percent Thursday after a published report said an investment group has proposed paying about $5 billion for the nation's second biggest toy retailer.

The company has been considering splitting its toy retailing business from its more lucrative Babies R Us operations.

The Wall Street Journal, citing unidentified people familiar with the matter, reported Thursday that an investment group including Cerberus Capital Management LP (search) made an opening offer last month of $23.25 a share for the entire company.

That is lower than its closing share price of $23.05 on Wednesday, when its shares rose 2 percent after The New York Post reported that an unidentified bidder had emerged willing to buy the entire company.

But the Journal said Thursday that one person close to the matter said the $23.25 a share offer "may be an old number," indicating other offers may be on the table.

It said Toys R Us initially was unreceptive to the takeover offer, but the newspaper said its sources feel that resistance may be easing.

Toys R Us shares rose 63 cents, or 2.7 percent, to $23.68 on the New York Stock Exchange (search).

Toys R Us shares have risen from about $12 a share since August, when the Wayne, N.J.-based company announced it wanted to separate the toys and babies units. It has given no substantive guidance since, aside from reiterating that an evaluation on restructuring would be completed by July.

Its toy business has been hurt by price cutting from the big discount chains such as Wal-Mart Stores Inc., the nation's biggest toy seller.

Babies R Us, which sells baby furniture, clothes and accessories, accounted for three-quarters of the company's operating income, despite logging just 15 percent of the company's $11.6 billion in sales, for the fiscal year that ended Jan. 31, 2004.

The Journal said the Cerberus group also includes investment banker Goldman Sachs Group Inc. and real-estate investment trust Kimco Realty Corp (search). It had previously reported the group was one of four finalists in an auction Toys R Us had set up to sell its toy chain. It said bids for that operation had come in at about $3.5 billion.

In addition to the Cerberus group, the Journal said other bidders for the toy chain were Kohlberg Kravis Roberts & Co. (search) ; a partnership of Apollo Advisors LP and Permira Advisors Ltd.; and an alliance between Bain Capital LLC and Vornado Realty Trust.

The newspaper said KKR also is interested in acquiring the whole company if it is available for sale.

The Journal said a spokeswoman for Goldman declined to comment and that Kimco and Cerberus didn't return phone calls.

Toys R Us spokeswoman Susan McLaughlin had said Wednesday that the company would not comment on the Post report of a bidder for the whole company.

Representatives for the bidding finalists have either declined to comment or not responded to requests for comment from The Associated Press.