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Staples agrees to buy Office Depot for $6.3 billion (Yashaswini Swamynathan, Reuters, MSN Money) The No. 1 U.S. office supplier,Staples (NASDAQ:SPLS), agreed to buy nearest rival Office Depot Inc (NASDAQ:ODP) in a $6.3 billion cash-and-stock deal to better compete against online and big-box retailers - read Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT). The deal will value ODP at $11 a share (based on SPLS closing price 02 February), a premium of 44% over its closing price 02 February 2015 (Monday). Questions exist about anti-trust clearance from the FTC (Federal Trade Commission) - see next article.
Office Depot-Staples Tie-up Would Test How Regulatory Thinking Has Evolved (Brent Kendall, The Wall Street Journal) Nearly 20 years ago the FTC (Federal Trade Commission) succeeded in blocking a previous merger attempt between Staples (NASDAQ:SPLS) and Office Depot (NASDAQ:ODP) on anti-trust grounds. Today significant competition in the office supply space from Amazon (NASDAQ:AMZN), Target (NYSE:TGT) and Walmart (NYSE:WMT) are likely to overcome any questions about control of the market. See next article.
For Staples and Office Depot, a Merger of Equal Problems (Paul Vigna, MoneyBeat, The Wall Street Journal) Both companies have had falling sales in recent years. Peak sales for Office Depot came in 2007 and for Staples it was 2011. According to this article, loss of competition can not be a concern because the two companies today combine for only 6% of the office supplies market. Here is an excerpt:
This isn’t a deal that’s being executed from a position of strength, and the benefits being touted – about $1 billion worth of cost cuts and promises of new strategies to boost sales – seem relatively tame. An FTC report from the time of the 2013 tie-up of Office Depot/OfficeMax – itself a combination of two struggling companies – made it clear that these companies are not in control of their market anymore.
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