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01/12/2021

Staples making 3rd go at acquiring Office Depot

Staples is looking to acquire rival Office Depot for the third time. 

The Framingham, Mass.-based office supplies retailer on Monday made an offer to buy ODP Corp., whose banners include Office Depot, OfficeMax and CompuCom, for $2.1 billion in cash. The $40-per-share offer price for ODP represents an approximate 60% premium over its average closing price for the last 90 trading days.

“Staples believes that its all-cash transaction is a compelling value proposition for ODP's stockholders that offers a high degree of certainty and is superior to the intrinsic, standalone value of ODP,” the company stated in a letter. “Staples has sufficient resources to finance the transaction, so our obligation to proceed with the transaction is not subject to a financing contingency.”

With respect to regulatory approvals, Staples said it prepared to take “all necessary measures” to divest ODP's business-to-business unit to a FTC approved and qualified buyer concurrently with the closing of the overall transaction, “thereby satisfying any reasonably anticipated regulatory objections.” 

Office Depot confirmed that it had received Staples' acquisition proposal and the board with its advisers were reviewing it.

“As part of its review, the board is evaluating various components of the proposal, including potential antitrust and other regulatory challenges given USR parent’s ownership of Staples [USR is a subsidiary of Sycamore Partners, which acquired Staples in 2017] and past regulatory decisions blocking the combination of the two companies, purchase price, and closing conditionality,” Office Depot said in a statement.

In 2016, Staples and Office Depot called off their merger after a federal judge issued an injunction temporarily blocking the $6.3 billion deal over antitrust concerns.   

Staples previously tried to acquire Office Depot in 1996.  But the deal was called off after regulators raised antitrust concerns.