January 20, 2016
In a press release, Staples and Office Depot stated that they “intend to extend” their merger agreement from its present “termination date” of 4 February to 16 May. The Federal Trade Commission filed a lawsuit 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). New developments earlier in 2016 had suggested “renewed optimism” in the merger being granted, but sources recently stated that “the odds of a settlement are near zero”.
The two companies previously called the decision to block their merger “flawed”, with a court case likely in March, while the European Commission is also investigating the deal, setting the deadline of 16 March for a decision, and it has already been approved in Australia, New Zealand and China. This newest development, both companies state, allows for “the completion of ongoing federal district court litigation” with the FTC, and both are “working to extend financing terms for the transaction”.
In turn, they expect to “execute the merger transition agreement once financing terms are finalised”, adding that the combined company “will be better positioned to provide value to customers, and compete against a large and diverse set of competitors”, as well as “better equipped to optimise its retail footprint, minimise redundancy, and reduce costs”.
Ron Sargent, CEO of Staples, also commented that “this merger creates an unparalleled opportunity to better serve our customers and to deliver shareholder value. We are committed to completing this transaction and look forward to a full and impartial judicial review”.
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