November 20, 2015
Ron Sargent says “our top priority is to get the deal done” despite government scrutiny.
The US Federal Trade Commission (FTC) is currently examining Staples’ $6.3 billion (€5.9 billion) bid to buy out its competitor, and is set to make a decision by 8 December, while the European Commission (EC) is also investigating the deal, setting an original deadline of 10 February 2016 but then extending that to 2 March 2016. The Recycler’s Editor and Publisher David Connett also commented on the deal in his blog, and you can view his opinions here.
The merger has already been approved in Australia, New Zealand and China, and BizJournals reported on Sargent’s assurances to investors that Staples is “continuing to work cooperatively” with agencies in the US, Canada and Europe, adding that “we are looking forward to hearing the FTC’s decision in the coming weeks”. Despite the US and European decisions being timelined, Sargent stated that he is “unsure” of Canada’s deadline for a decision on the deal.
EC opposition to the deal comes from suspicions that it “could lead to reduced competition and higher prices” for competitors, and Sargent “declined to answer” when analysts enquired about “the future of the deal”, only stating that “we have a process, we’re working our way through the process, and we’ll communicate as quickly and as knowledgeably as we can when the time is right”. Other executives stared that Wal-Mart and Amazon were creating “increased competition” for both Staples and Office Depot.
Additionally, Office Times reported that Staples had seen profits fall 8.8 percent in the third quarter, as well as a six percent decline in sales to $5.6 billion (€5.2 billion). Sargent commented that the company was “driving solid sales and earnings growth” in the US, with its “strategic reinvention on track”, though the acquisition would “accelerat[e] the transformation”. Reasons given for the poor results were “changes in foreign exchange rates”, store closures and “sales declines” in ink and toner as well as business machines and accessories.
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