Staples Looks to Immediately Acquire Office Depot in $2.1B Bid

Staples on Monday sent a bid to Office Depot's board of directors with an offer to acquire the rival office supplies company for $40 per share, or $2.1 billion, reports South Florida SunSentinel. Staples, which is now a privately held company controlled by the private equity group Sycamore Partners, threatened to start buying shares in March from other stockholders if ODP, Office Depot's parent company, declines its bid. Staples said it currently owns about 4.9 percent of ODP’s common stock.

In its own statement Monday, Office Depot said it had received the offer and that its board is “carefully reviewing the proposal” to see if it “is in the best interests of the company and its shareholders.” As part of its review, the board is evaluating the “potential antitrust and other regulatory challenges” given past regulatory decisions that blocked the merger of the two companies.

Total Retail's Take: It seems that Staples isn't taking no for an answer in its second attempt in nearly five years to acquire Office Depot. In 2016, the Federal Trade Commission blocked its offer of $6.3 billion, reasoning that a merger could reduce competition for nationwide contracts for office supplies. To avoid any antitrust snag this time, Staples is prepared to "divest ODP's B2B business operations to a FTC approved and qualified buyer," per the release. Sycamore acquired Staples for $6.9 billion in 2017.

Staples isn't prepared to wait long for an answer, either, as Managing Director of Sycamore Partners Stefan Kaluzny in the letter cited the lengthy six-month regulatory process and urged Office Depot to "cooperate with the regulatory authorities as soon as possible." The offer was complete with a thinly veiled threat to "commence a public, all-cash tender offer for 100% of ODP's outstanding shares of common stock in March 2021 in the event we cannot reach a negotiated agreement with ODP."

During the COVID-19 pandemic, both companies have benefitted from consumers' outfitting home offices with desks, printers, paper, computers and other accessories. Office Depot also found success selling personal protective equipment, including face coverings, safety goggles, and gloves to companies throughout the health crisis. This recent uptick in the office supplies category, plus Office Depot's retail division reportedly being up 43 percent year-over-year in the third quarter of 2020, may be the cause of Staples' sudden feverish demand for an acquisition of the company, looking to profit off of the company's continued growth before the at-home coronavirus office supplies boom ends.