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Staples and Office Depot sell corporate contract business

Staples and Office Depot sell corporate contract business

February 17, 2016

The two companies have agreed to sell their “large corporate contract business and related assets”.staples

BizJournals reported on the agreement between the two retailers and US-based supply wholesaler Essendant, which will see both Staples and Office Depot sell over $550 million (€494 million) of contract business and assets to the company. Essendant will pay Staples around $22.5 million (€20.2 million), with over 25 percent of the revenue acquired from Fortune 100-ranked companies, and “approximately half” from Fortune 500-ranked companies.

The Federal Trade Commission (FTC) filed a lawsuit last year to block the $6.3 billion (€5.8 billion) merger, with the suit seeing the companies offer to divest $1.25 billion (€1.14 billion) of commercial contracts in exchange for approval. This was rejected by the FTC, leaving Staples to call it “misguided”, and was an upgrade from a previous offer of $600 million (€558 million).

Both companies extended their merger agreement to May in January in light of the court case, after new developments earlier this year suggested “renewed optimism” in the merger being granted, but sources stated “the odds of a settlement are near zero”. Staples is also reportedly facing the threat of loans being withdrawn, and made a series of staff cuts. The two companies previously called the decision to block their merger “flawed”, with a court case likely in March.

However, the European Union recently approved the merger after Staples and Office Depot made concessions, and this latest development “may appease federal regulators weary” of the merger’s back-and-forth, the news site stated. The commercial business and assets “divested relate primarily to accounts held by Staples and Office Depot acting as wholesalers”, it added, with a lot of the deals with “minority and woman-owned office supply resellers”.

Ron Sargent, Staples’ Chairman and CEO, commented: “We’re pleased to reach this agreement with Essendant as we continue to work to complete the acquisition of Office Depot. Our agreement with Essendant strengthens a national competitor, further enables independent office products dealers, and helps minority and woman-owned businesses compete for national commercial customers.”

Categories : City News

Tags : Office Depot Staples USA

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