Staples Acquires Office Depot for $6.3B
Office-supply chain Staples agreed to buy its sole remaining competitor, Office Depot, in a $6.3 billion-deal that would create one mega-office-supply chain.
Staples, Inc. and Office Depot, Inc. have entered an agreement where Staples will acquire all outstanding shares of Office Depot. The transaction values Office Depot at an equity value of $6.3 billion.
Discussions of Staples acquiring Office Depot began in September 2014, which followed with an agreement that was unanimously approved by each company’s Board of Directors. With the acquisition of Office Depot, Staples will have pro forma annual sales of approximately $39 billion.
“This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment,” said Ron Sargent, Staples’ chairman and CEO. “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.”
“This transaction delivers great value for our shareholders and creates a company ideally positioned to serve our customers and grow over the long term,” said Roland Smith, chairman and CEO for Office Depot. “It is also an endorsement of our many accomplishments and the tremendous success we’ve had integrating Office Depot and OfficeMax over the past year. We look forward to bringing our experience and knowledge to the new organization.”
Staples expects to generate at least $1 billion of annualized cost synergies by the third full fiscal year post-closing. The majority of these synergies would be realized 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. Staples estimates one-time costs of approximately $1 billion to achieve its synergy target.
Staples’ corporate headquarters will remain in Framingham, Mass. and Sargent will continue to serve as Staples’ Chairman and Chief Executive Officer.
The transaction is expected to close by the end of 2015. During this time, Staples will remain focused on its strategic reinvention plan, and Office Depot will remain focused on its integration of OfficeMax.
