Office Depot to get Staples stores after all?
SEC filing spurs new speculation
Staples, which is in the process of going private, received an offer of $625 million to $700 million for its more than 1,200 retail stores and brand, according to a company filing with the Securities and Exchange Commission.
The report has some industry observers saying that the would-be buyer must be Boca Raton-based Office Depot, which tried to merge with Staples last year but called it off after a court challenge by the Federal Trade Commission. The FTC deemed the combination “anti-competitive” for business consumers.
Office Depot had no comment Monday on the speculation. Staples didn’t respond to a request for comment. Sycamore Partners, the private investment group that is now acquiring Staples, said it had no comment.
In its July 21 filing, Staples said that on June 5, “Party A submitted a nonbinding proposal to acquire the company’s U.S. retail business for $625 million to $700 million in cash.”
But that offer was made just prior to the sale of the entire company to Sycamore Partners. On July 26, Staples agreed to be acquired by the New York private equity firm for $6.9 billion or $10.25 a share. The deal has received early clearance to move forward from the FTC, but still needs shareholder approval. It is expected to close by year-end.
If Office Depot is allowed to buy Staples’ stores, it would “be a back-door way of getting the merger denied approved,” said Ken Thomas, a South Florida economist who wrote the FTC to object to the Office Depot-Staples merger plan. He believes the FTC would have to again address the sale, which he said may have a different view of the combination under the Trump Administration.
FTC spokeswoman Elizabeth Lordan said Monday that while she could not
comment on any specific merger proposal, the commission and the Department of Justice “can investigate any acquisition that may lead to a lessening of competition.”
Office Depot operates about 1,400 Office Depot and OfficeMax stores in the U.S. Office Depot acquired OfficeMax in 2013 and has been closing less profitable stores across the nation. It has been selling its overseas businesses to concentrate on its North American holdings.
Office Depot CEO Gerry Smith, appointed in January, said in a first-quarter conference call that he views the remaining North America stores as “distribution points” for “buy online, pick up in store sales.”
Both office-supply retailers have been struggling for years to reinvent themselves in light of online competition such as Amazon.com and discount retailers such as Walmart. But the FTC rejected the retailers’ argument that they needed to merge and took them to court in Washington, D.C. Office Depot and Staples finally scrapped their planned $6.3 billion merger in May 2016.
Staples stock closed at $10.15 a share, up a penny or 0.10 percent on Monday. Office Depot’s stock closed at $5.87 a share,up 11 cents or 1.91 percent. Both stocks are traded on Nasdaq.