Office Depot to be acquired by Staples in a $2.1 billion deal
In a move that harks back to 1997 when the Federal Trade Commission (FTC) blocked a proposed merger between the two office supply giants, Staples has once again expressed interest in acquiring Office Depot.
The regulatory process for Staples' latest bid is expected to take at least six months, as the company has already begun notifying U.S. and Canadian regulators about its intentions. Staples has proposed a bid of $40 per share, amounting to $2.1 billion, a sum that Office Depot's board is currently reviewing.
However, the path to a potential deal is not without challenges. Staples is prepared to address potential antitrust concerns by divesting Office Depot's business-to-business operations to a FTC-approved and qualified buyer. This strategy aims to avoid the antitrust issues that thwarted Staples' plans to acquire Office Depot for triple that amount in 2016.
Office Depot, for its part, did not immediately respond to a request for comment. The company has been through significant changes in recent years, including downsizing its retail operations, announcing plans to lay off more than 13,000 workers, and permanently closing more stores in coming years.
Interestingly, a month after Sycamore Partners acquired Staples in 2017, there were reports of Sycamore mulling a sale of the retail business to Office Depot. Sycamore Partners, in fact, has already announced its intention to pursue the acquisition of Office Depot, having received confirmation of its offer from the company.
It is worth noting that Staples has already split apart its business-to-business and retail operations. This move could potentially ease regulatory concerns, as Staples could argue that the acquisition would not create a monopoly in the retail sector.
Staples has urged the Office Depot board to instruct management to cooperate with the regulatory authorities as soon as possible, expressing a sense of urgency around its proposal. The outcome of this potential deal will be closely watched by the office supply industry and regulatory bodies alike.
