May 17, 2016
Having called off the merger with Staples Inc. due to antitrust concerns, Office Depot is considering its options and said that it expected “disruption from the terminated deal to continue into the current quarter” and that it was looking at “various capital structure and shareholder return alternatives”.
In February Staples had agreed to sell Office Depot’s contract distribution business as well as its retail, online and catalog operations in Europe, as well as all operations in Sweden. This was to win approval for its $63 billion (€55.5 billion) takeover bid of the company from European regulators.
Office Depot has about 1,800 stores but is set to close 400. The company said on Monday that it was looking at “various capital structure and shareholder return alternatives”. CEO Roland Smith said during an investor conference, “We fully understand the future success of Office Depot will require bold new action.” On Monday the company laid out plans to make additional procurements and “increasing markets like break room and cleaning supplies”.
Staples will pay Office Depot a $250 million (€220) breakup fee 19 May and the company said that it “may leverage its assets and the breakup money to make its own acquisitions”. Local spokespersons said that “the merger’s failure was bittersweet, preserving Office Depot’s headquarters in Palm Beach County but leaving the company in a weakened position”.
Office Depot blamed “disappointing first-quarter financial results on the delayed takeover by Staples”. But the company has been “struggling for some time with too many stores and a shrinking office-supply marketplace”. In 2015, Office Depot’s sales declined 10 percent to $14.49 billion (€12.78) compared with 2014 sales of $16.1 billion (€14.20).
Categories : World Focus