Office Depot rejects $2.1bn takeover bid from rival Staples
Company says latest proposal is not in shareholders’ interests but is open to negotiations
Office Depot has rebuffed a $2.1bn takeover bid from its larger rival Staples but said it was open to negotiating a deal, as the two largest US bricks-and-mortar stationery retailers make a third attempt to combine, according to people briefed on the matter.
In a letter sent to Staples’ board, ODP said that the proposed takeover bid would not be in the best interest of its shareholders.
Staples, which is controlled by US private equity group Sycamore, had offered on January 11 to pay $40 per share for ODP, a more than 60 per cent premium to ODP’s average closing share price during the 90 days prior to the bid.
The unsolicited bid from Staples marks the latest attempt by the US office-supply chain to acquire its smaller rival, four years after a federal judge blocked what was then a $6.3bn bid for ODP on the basis that it would hurt competition. A merger was also blocked in 1997, when they proposed to create “Staples the Office Depot”.
Since the last merger attempt both retailers have struggled to compete with the likes of Amazon and Walmart, which have won market share with regular and corporate customers.
While office suppliers have held up better than other retailers due to a shift towards working from home, the pandemic has exacerbated challenges faced by the retail sector as lockdowns dent sales.
Staples is convinced the changing nature of the market will be sufficient to secure regulatory backing and push forward with a deal that will allow it to make significant cost savings.
ODP downplayed its rival’s projections, saying in its letter that the cost savings generated by the proposed merger with Staples could be obtained by staying independent.
Staples said last week that it would consider increasing its offer for ODP if the company agreed to sell some of its assets, including CompuCom, a business ODP acquired in late 2017 for $1bn.