Toys'R'Us ANZ (ASX:TOY) has entered a three-year commercial services agreement with Directed Electronics Australia to co-develop new products, packaging, and marketing services, aiming to accelerate its private label initiatives, according to a Monday filing with the Australian bourse.

The deal includes a AU$400,000 annual supply of goods, with an additional AU$1.2 million annual fee paid through options convertible to TOY shares, the filing said.

The agreement spans an initial three years, with an option for two 12-month extensions. TOY will retain full ownership of all intellectual property generated through its collaboration with Directed.

If shareholder approval is not obtained, TOY will pay the fee in cash, the filing added.

Shares of the company rose 13% at market close after earlier hitting a 52-week-low.