With Sycamore's backing, Staples circles Office Depot again
January 12, 2021
Staples is making another run at acquiring a longtime rival.
The office supplies company on Monday offered to buy the parent company of Office Depot for $40 per share in cash, or around $2.1 billion. That marks a 61% premium to the average price of Office Depot stock over the past 90 days but just an 8% premium to its closing price last Friday, as the company's shares have surged so far in 2021. That surge continued Monday, with shares climbing 19% to close at $44.14.
Staples previously agreed to purchase Office Depot for $6.3 billion in 2016, but the Federal Trade Commission blocked the deal a year later due to antitrust concerns. The same thing happened in 1997 when the two companies tried to merge for the first time. But this is the first attempted combination since Staples was acquired for $6.9 billion in 2017 by Sycamore Partners, a private equity firm specializing in retail investments, marking a bullish move in a retail sector struggling with consumers shifting to ecommerce. In a press release announcing the latest offer, Staples said it would be willing to divest Office Depot's US commercial unit to head off potential antitrust concerns.
Sycamore previously made headlines for its Staples investment in 2019, when the firm paid itself a $1 billion dividend by refinancing the company's debt.
Related read: Retail bankruptcies pile up—but PE firms are still mining for deals
The office supplies company on Monday offered to buy the parent company of Office Depot for $40 per share in cash, or around $2.1 billion. That marks a 61% premium to the average price of Office Depot stock over the past 90 days but just an 8% premium to its closing price last Friday, as the company's shares have surged so far in 2021. That surge continued Monday, with shares climbing 19% to close at $44.14.
Staples previously agreed to purchase Office Depot for $6.3 billion in 2016, but the Federal Trade Commission blocked the deal a year later due to antitrust concerns. The same thing happened in 1997 when the two companies tried to merge for the first time. But this is the first attempted combination since Staples was acquired for $6.9 billion in 2017 by Sycamore Partners, a private equity firm specializing in retail investments, marking a bullish move in a retail sector struggling with consumers shifting to ecommerce. In a press release announcing the latest offer, Staples said it would be willing to divest Office Depot's US commercial unit to head off potential antitrust concerns.
Sycamore previously made headlines for its Staples investment in 2019, when the firm paid itself a $1 billion dividend by refinancing the company's debt.
Related read: Retail bankruptcies pile up—but PE firms are still mining for deals