THIRD TIME’S A CHARM
Staples is trying again to buy the parent company of Office Depot.
Staples offered to buy the parent of Office Depot in a deal valuing the company at $2.1 billion, the latest attempt to consolidate the office-products space to better compete against online retailers.
Closely-held Staples, under the corporate name USR Parent Inc, said Monday that it sent a letter to ODP Corp laying out a plan to buy the company for $40 per share in cash.
That’s 8.2% above Friday’s close, and Staples said it represented a 61% premium over ODP’s average closing price over the last 90 days.
ODP, which also owns brands including OfficeMax, said in a statement that “it’s carefully reviewing the proposal in consultation with financial and legal advisers.’’
A deal would bring together two of the biggest names in office supplies at a time when brick-and-mortar retailers are struggling to cope with broad economic shutdowns in the pandemic.
Staples had previously tried to buy Office Depot, but the $6.3 billion acquisition was called off in 2016 amid antitrust scrutiny.
“Sycamore Partners-backed Staples has sufficient resources to finance the transaction,’’ it said.
“If the target company doesn’t cooperate,’’ Staples said it would commence a tender offer in March.
“Certain Staples affiliates already own about 4.9% of ODP’s common stock,’’ it said.
Staples said it would consider upping its proposed valuation if Office Depot were to divest certain units, like its its CompuCom division or its US businessto-business unit.
Staples’ earlier attempt to buy Office Depot was abandoned after a federal judge blocked the deal, siding with the Federal Trade Commission over concerns it would reduce competition in supplying large companies.
Staples said Monday that “it’s prepared to divest Office Depot’s commercial business unit to an FTC-approved buyer to get past any anticipated regulatory objections this time.’’
Before the pandemic, contracting with businesses, both large and small, was seen as the most valuable part of the office-supplies sector. Both Staples and Office Depot had been broadening their offerings.
But the retail business has gotten a lift as Covid-19 created a boom in Americans working from home, driving demand for computer printers, paper and more.