Staples to buy Office Depot for $6.3bn

GMT 19:47 2015 Wednesday ,04 February

Arab Today, arab today Staples to buy Office Depot for $6.3bn

US office supplies giant Staples
New York - AFP

US office supplies giant Staples announced Wednesday that it will buy rival Office Depot in a deal valued at $6.3 billion.
Office Depot shareholders will receive a combination of cash and Staples shares that value the chain at a 44 percent premium to Office Depot's closing price on February 2, before news of the likely deal was reported.
The two companies, which together have more than 4,000 retail outlets worldwide, said the deal would better position them to compete with online vendors and big-box retailers. Both chains focus on selling office stationery, computers, printers and printing supplies.
"This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment," said Staples chief executive Ron Sargent.
"We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint."
The computerization of data has reduced demand for traditional office supplies, and online and volume retailers have also challenged the two chains.
In 2013 Office Depot paid $1.2 billion for another competitor, OfficeMax, and subsequently closed about 400 stores in the United States.
Staples has also announced plans to close 225 stores in 2014.
The deal is expected to get extensive scrutiny from antitrust regulators. In 1997, the US Federal Trade Commission blocked a merger between Staples and Office Depot.
Executives from the two firms told analysts on a conference call that they were encouraged by the FTC's approval of the Office Depot-OfficeMax deal.
In its statement sanctioning the 2013 OfficeMax transaction, the FTC observed that the market for office supplies "has changed significantly" since 1997.
Office supply companies "today face significant competition and... the proposed merger is unlikely to substantially lessen competition in the retail sale of consumable office supplies," the FTC said.
The deal follows pressure for the merger from activist shareholder Starboard Value. Starboard holds about six percent of Staples shares and 10 percent of Office Depot.
In midday trade, Staples shares fell 9.4 percent to $17.22, while Office Depot advanced 1.9 percent to $9.45.


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