Staples agrees to buy Office Depot for $6.3 billion
Staples has agreed to buy Office Depot in a $6.3 billion deal that will bring together the last two major U.S. office supply chains and two of Furniture/Today’s Top 25 Furniture and Bedding Retailers.
News sources including Bloomberg reported that Office Depot shareholders will get $11 per share in a combination of cash and Staples stock, representing a 44% premium on Office Depot’s closing share price on Monday.
Together, the two chains would have about $39 billion in annual revenue and more than 3,000 stores, according to reports. Staples ranked No. 19 on Furniture/Today’s Top 25 last year with 2013 furniture sales of $870 million; and Office Depot was at No. 25 with $630 million, mostly in flat-pack office furniture and desk chairs.
Bloomberg said the deal will draw scrutiny from the Federal Trade Commission because it would create a single office-supply mega-chain, although regulators have been increasingly willing to approve retail mergers because of burgeoning e-commerce competition.
In a press release, Staples said it began talks to acquire Office Depot in September. The merger was pushed by activist investor Starboard Value, according to Bloomberg.
“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 Ron Sargent, Staples chairman and CEO. “We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies.”
Staples said that pending regulatory approval, the deal is expected to close by the end of the year.
In 2013, Office Depot merged with Office Max, bringing together the second- and third-largest office supply chains.
Source: Furniture Today