Office Depot Rejects Staples' Latest Acquisition Offer
Office Depot parent company ODP Corp. rejected Staples’ latest acquisition offer yesterday, claiming that the offer “lacked basic deal terms including a purchase price.”
Staples has been trying to purchase assets of Office Depot since 2015, when it was thwarted by the FTC. This time around, Amazon's status as a gargantuan office supply wholesaler theoretically makes it easier for Staples to win antitrust approval, but Staples is finding it hard to reach an agreement with Office Depot.
In January, Staples reportedly offered $2.1 billion, and would allow ODP to divest its business-to-business operations to a third-party buyer.
A few days later, ODP rejected the offer, and countered with a proposal to merge the two companies’ direct-to-consumer retail operations, leaving Office Depot’s business-to-business operations wholly separate from the transaction.
This time, ODP told Reuters that Staples “did not include a valuation of the assets that it sought to acquire or any commitment by Staples to complete the deal.”
The offer did reportedly include retail and consumer-facing business, and “certain business-to-business assets.” ODP once again rejected the offer by trying to convince Staples to combine the two retail businesses.
“The board […] has determined that ODP, in the best interest of its shareholders, cannot agree to such a proposal,” ODP chairman Joseph Vassalluzzo said in a letter to Staples ownership, according to Reuters.
Originally, FTC regulations were the hurdle for Staples and Office Depot, having agreed to a $6.3 billion purchase price. Five years later, with the office supply landscape looking much different thanks to Amazon, the price has changed, but the problem lies in agreeing to terms.
Based on previous developments, though, it’s fair to say that ODP is open to the idea of an acquisition. It just needs to be the right offer. Either way, it doesn't look like Office Depot's B2B unit will be included.