Staples discloses third attempt to buy rival Office Depot
Staples may spin off its retail chain to Office Depot
Staples is going private in $6.9 billion deal
Sycamore Partners is in advance talks to buy Staples
Office Depot rejected a takeover offer from its archrival Staples on Tuesday, instead offering a counterproposal that it said would invite less scrutiny from antitrust regulators.
The office supply chain said it would be open to combining its retail and e-commerce business with Staples, which would leave essentially one national office supply chain.
Office Depot said its proposal would have a greater chance of gaining regulatory approval than Staples’ idea of buying Office Depot for $40 a share, combining retail operations, and then selling Office Depot’s business-to-business division to a third party.
Office Depot generates about half its sales from its business-to-business segment.
The argument is that combining retail operations carries less risk since there would be no third-party buyer to find to buy the B2B segment that would need to be cleared by regulators.
“I think this would be easier to get through the FTC,” a DC antitrust source not involved in the merger told The Post.
The DC source said when the Federal Trade Commission successfully sued to stop Staples in 2016 from buying Office Depot it did not focus on the retail market.
“If this were a simple two-to-one merger, the FTC would have gone to court on those grounds,” the DC source said.
Instead, the FTC focused on how combining the two office supply giants would give them a nearly 80 percent share of the B2B market.
Office Depot on Tuesday said combining the retail operations in a joint venture would “help maintain competitiveness against nontraditional retailers and optimize ongoing choices for consumers.”
“Another option would be an acquisition by Staples of ODP’s retail and consumer-facing ecommerce operations for a price that enables our shareholders to benefit from such synergies,” Office Depot said.
Ken Thomas, an antitrust expert who was a Wharton faculty member for 42 years, told The Post he did not think regulators would allow the retail sides to merge.
“I went to every Costco, BJ’s and Walmart and there are no real effective alternatives for the retail consumer than Staples and Office Depot,” he said, when studying the 2016 merger.
“There is no comparison for the full range of products,” Thomas said. “Why not let Home Depot and Lowe’s merge?”
He believed Sycamore Partners that owns Staples might be a year too late, and while this merger might have gotten through in some form during the Trump years of relatively light regulation, it is not going to happen now.
Shares of Office Depot parent ODP on Tuesday rose 0.2 percent to close at $45.93.
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