The rapidly changing tools of the work place and the way we shop has led to another major consolidation in the retail office supply business as Staples announced the $US6 billion ($A7.69 billion) acquisition of rival Office Depot. The cash and stock deal comes a little more than a year after Office Depot combined with OfficeMax, with too many stores fighting for too few sales. Businesses and consumers have shifted rapidly to online shopping at the same time that printers and the use of other tra
ditional office supplies have diminished. That shift coincided with a recession that substantially altered the way companies spend money.
The new company is expected to have annual sales of approximately $US39 billion.
Office Depot shareholders will receive $US7.25 in cash and 0.2188 of a share in Staples at closing. The transaction values Office Depot at $US11 per share. The companies put the deal’s equity value at $US6.3 billion.
Staples has a market capitalisation of approximately $US11 billion, while Office Depot, which tied up with OfficeMax in November 2013, has a market capitalisation of about $US4 billion.
Staples said on Wednesday it will realise at least $US1 billion in annual cost savings by the third full fiscal year after the transaction is complete.
“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 chairman and CEO, Ron Sargent, said in a statement.
Sargent will continue to serve in those roles and Staples will keep its corporate headquarters in Framingham, Massachusetts.
Last month activist hedge fund Starboard Value LP urged Staples to combine with Office Depot, based in Boca Raton, Florida.
Starboard disclosed in December it had purchased a 5.1 per cent stake in Staples and boosted its stake in Office Depot. New York’s Starboard has a history of buying stakes in companies and then pushing for change.
Early last year Staples said it was closing up to 2225 stores by the end of 2015 because people were using less office supplies and shopping more online than they were at its stores.
The deal, which was unanimously approved by both companies’ boards, is expected to close by year’s end. It still needs approval from Office Depot shareholders.
Shares of Staples shed 22 cents to $US18.79 in pre-market trading.
AP
