According to sources, Permira, which opened up shop 20 years ago in London and has seven offices in Europe and one in New York, was initially interested only in Toys' stronger European operations, but company officials have said repeatedly that they don't intend to sell the business off piece by piece. The New York-based Apollo has apparently been brought to the table to add muscle to a bid for the whole 1,200-store operation. That bid, if successful, could lead to an eventual separation of the domestic and international operations anyway, according to sources.

A spokesperson for Toys 'R' Us declined to comment on the potential sale of the operation. Permira and Apollo could not be reached for comment.

As part of its ongoing effort to right its financial ship, Toys 'R' Us, based here, has already sold off its Kids 'R' Us operation. If and when the retail toy business is disposed of, the company would be left with just its more successful Babies 'R' Us division, which company officials have indicated is not for sale.