Office Depot Rejects Staples Buyout Offer, Proposes Alternative Ventures
Office Depot has rejected another takeover attempt by office supply rival Staples, according to a letter sent Tuesday by a company executive, reports CNBC. In the letter, the chairman of the board for the parent company of Office Depot, ODP, said it would be open to another deal that draws less scrutiny from antitrust regulators. ODP said it's open to a different kind of a deal, such as selling its retail and e-commerce businesses to Staples or agreeing to a joint venture.
Staples has sought to buy Office Depot’s parent company, ODP, two other times. Along with Office Depot, ODP also owns OfficeMax, another chain of office supply stores, and CompuCom, an information technology company. Five years ago, antitrust officials blocked a merger between Office Depot and Staples, and sent shares of the two companies tanking.
Total Retail's Take: Last week, I reported on Staples' aggressive bid to acquire Office Depot in a letter that included a threat to purchase all remaining ODP shares if the offer wasn't approved by March. Not to be intimidated by a perceived unsuitable offer, ODP's board of directors has turned Staples down. However, it's not rejecting a partnership altogether. The ODP board is interested in a safer deal that won't raise antitrust alarms. In the refusal letter to Staples, ODP Chairman Joseph Vassalluzzo wrote that a deal that’s not a full takeover “could be executed more efficiently and with far greater certainty and less regulatory risk than your proposal” and "would also help maintain competitiveness against nontraditional retailers and optimize ongoing choices for consumers.”
It would be wise for Staples to consider Office Depot's counteroffer before steamrolling ownership in March. As written in a press release, ODP proposes that a transaction "limited to our retail and consumer-facing and e-commerce business would eliminate the time, complexity and uncertainty created in [Staples'] proposal by the need to identify a suitable third-party buyer willing to acquire the B2B Business on terms that would be mutually acceptable to our respective companies." Although Staples and ODP appear to both see value in a transaction between the two businesses, these office supply retailers need to head back to the drawing board and come to a mutually beneficial agreement.
Kristina Stidham is the digital content director at Women in Retail Leadership Circle and sister brand Total Retail. She is passionate about digital media and handles video, podcast and virtual event production for both brands. You can often find her at WIRLC, TR, or industry events with her camera and podcasting equipment recording interviews with retailers.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her two pet guinea pigs, and travel to new places.