Staples Purchases Office Depot for $6.3 Billion
Staples, Framingham, Mass., bought its main competitor Wednesday, purchasing Office Depot, Boca Raton, Fla., for $6.3 billion. The deal awaits approval from federal regulators and Office Depot shareholders.
Both companies have struggled, with Staples planning to close 225 stores by mid-2015 and Office Depot, which bought OfficeMax in 2013, aiming to shutter 135 locations this year, according to The Washington Times. And more closures could occur after the merger as about half of Staples stores are within five miles of Office Depot sites.
In the deal that could make Staples the lone office-supply chain remaining, Staples announced it will acquire all of the outstanding shares of Office Depot, and Office Depot shareholders will receive $7.25 in cash and 0.2188 of a share in Staples stock for each Office Depot share at closing.
Both companies' board of directors have approved the sale, which has been in the works since September, and the company expects to close by the end of 2015. Staples expects annual sales to reach $39 billion when the merger is completed, and hopes to reduce costs by the third full fiscal year after closing through "headcount and general and administrative expense reductions, efficiencies in purchasing, marketing, and supply chain, retail store network optimization, as well as sharing of best practices," according to Staples.
“This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment,” Ron Sargent, Staples’ chairman and CEO said in a statement. “We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies.”
Sargent will remain chairman and CEO, but the company's board of directors will expand from 11 to 13 to include two Staples-appointed Office Depot directors.