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Industryweek 8206 Staples

Staples and Office Depot Merge in $6 Billion Deal

Feb. 5, 2015
The combo gives Staples more than 4,000 locations across the country, something it says it needs to compete with the Amazons and Walmarts.

Two office supply heavyweights are set to become one. Staples said Wednesday it would buy rival Office Depot in a deal worth $6.3 billion.

The move makes Staples the last brick-and-mortar specialty store dedicated to selling computers, furniture, Post-Its of all sizes and other office supplies. Staples merged with Office Max more than a year ago.

It’s not the first time the pair have tried to get together. A 1997 plan was denied by the Federal Trade Commission because it would be anti-competitive. But now, nearly 20 years later, the make-up of the market has changed with on-line retailers and big box stores carrying much of the same merchandise.

The combo gives Staples more than 4,000 locations across the country, something it says it needs to compete with the Amazons and Walmarts. “The strategic and financial benefits of Staples’ acquisition of Office Depot are compelling, the combined company is better positioned to provide value to customers and compete against a large and diverse set of competitors,” said Staples chief executive Ron Sargent.

Staples said the deal will save as much as a $1 billion dollars annually, while at the same time, it will cost about a $1 billion to complete. The company also acknowledged some locations will close.

Between the two retailers they account for $39 billion dollars in annual sales. Office Depot shareholders will receive a combination of cash and Staples shares valued at a 44 percent premium to Office Depot's closing price on February 2.

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