Blog Publisher’s comments:
(a) You would be
hard pressed to find a business more boring than office supplies.
(b) Considering
the competitive landscape, this deal would not be unlike a deal that would
put together – in one company – ARC, ABC Imaging, Thomas Printworks, NRI and all of the individually owned
companies who are ReproMAX and RSA members. (That’ll never happen, but “just saying’”)
Story from Reuters.com
UPDATE 3-Staples agrees to buy
Office Depot, FTC approval seen likely
Wed Feb 4,
2015 11:38am EST
By Yashaswini
Swamynathan and Devika Krishna Kumar
* Deal aimed
at competing better with online and big box rivals
* FTC approval
likely, experts say
* Staples’
shares fall over 10 pct, Office Depot’s rise 1.5 pct (Adds comments from
antitrust experts and analyst, updates shares)
Feb 4
(Reuters) – Staples Inc, the No. 1 U.S. office supplies retailer, agreed to buy
No. 2 Office Depot Inc in a $6.3 billion deal designed to help it better
compete against Wal-Mart Stores Inc and online rivals such as Amazon.com Inc.
The U.S.
government’s antitrust watchdog, the Federal Trade Commission, is likely to
approve the deal, experts said, agreeing with the companies that the rise of
online retailers and mega stores had changed the competitive landscape since
1997 when the agency stopped the companies from merging.
The FTC noted
the proliferation of competitors in the market for basic office supplies when
it signed off on Office Depot’s purchase of No. 3 OfficeMax in 2013.
“The same
factors that the FTC cited in the Office Depot/OfficeMax deal are present
here,” said Seth Bloom, a veteran of the Justice Department’s antitrust
division now in private practice. “I think there’s a fair chance for this
deal to be approved.”
The FTC’s
review will likely focus on whether prices have risen since Office Depot bought
OfficeMax, said Michael Keeley, a partner at Washington, D.C. law firm Axinn,
Veltrop & Harkrider.
“Unless
the FTC finds that prices have gone up as a result of that acquisition, the
Staples transaction should have a good chance at clearance as well,”
Keeley said.
Staples’
shares fell more than 10 percent, suggesting investors were concerned about the
deal to combine the biggest remaining U.S. retailers of basic office supplies
such as paper and ink toner. Office Depot’s shares rose about 1.5 percent.
Brian Yarbrough,
an analyst at brokerage Edward Jones, said Staples was paying “a more than
fair price” for Office Depot and was taking on a large debt to buy a
competitor in a weak market.
Staples said
it had secured a $3 billion credit facility and a $2.75 billion six-year term
loan financing to fund the deal. It will also suspend its share buyback
program.
Staples said
it could call off the deal if authorities ordered divestitures that delivered
more than $1.25 billion of Office Depot’s 2014 U.S. revenue.
The FTC did
not require Office Depot to ditch stores when it bought OfficeMax.
Activist
investor Starboard Value LP called for the companies to merge last month to
save costs.
Starboard last
reported a 5.1 percent stake in Staples and a nearly 10 percent holding in
Office Depot.
Staples will
pay $7.25 per share in cash and 0.2188 of its shares for each Office Depot
share, a premium of 44 percent to Office Depot’s close on Monday before the Wall
Street Journal reported that the companies were in talks.
0
0
1
527
3006
Proactive Management
25
7
3526
14.0
Normal
0
false
false
false
EN-US
JA
X-NONE
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:Cambria;
mso-ascii-font-family:Cambria;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Cambria;
mso-hansi-theme-font:minor-latin;
mso-fareast-language:JA;}
At $16.89, the
low of Staples’ share price on Wednesday morning, the deal values each Office
Depot share at $10.94. Office Depot’s stock was trading at $9.38.
Four Charts That Explain the Merger of Staples and Office Depot
0
0
1
35
206
Proactive Management
1
1
240
14.0
Normal
0
false
false
false
EN-US
JA
X-NONE
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:Cambria;
mso-ascii-font-family:Cambria;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Cambria;
mso-hansi-theme-font:minor-latin;
mso-fareast-language:JA;}
Reprographics 101 