Staples And Office Depot To Terminate Merger Agreement
Staples, Inc. and Office Depot plan to terminate their merger agreement following a ruling by the U.S. District Court for the District of Columbia that granted the Federal Trade Commission’s request for a preliminary injunction to block the acquisition. Staples participates in the promotional products industry as distributor Staples Promotional Products (UPIC: AMER0016).
Under the terms of the merger agreement, Staples will pay Office Depot a $250 million break-up fee. Staples also plans to terminate its agreement to sell more than $550 million in large corporate contract business and related assets to Essendant in connection with the termination of the Office Depot merger agreement.
“We are extremely disappointed that the FTC’s request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case,” says Ron Sargent, Staples’ chairman and chief executive officer. “We believe that it is in the best interest of our shareholders, customers and associates to forego appealing this decision, terminate the merger agreement and move on with our strategic plan to drive shareholder value. We are positioning Staples for the future by reshaping our business, while increasing our focus on mid-market customers in North America and categories beyond office supplies.”
The company has announced a strategic plan to enhance long-term value, including building on its success with mid-market business customers with 10-200 employees; exploring strategic alternatives for its European operations; finding cost savings by reducing product costs, optimizing promotions, increasing the mix of Staples Brand products and reducing operating expenses; and continuing its dividend program.
The companies first entered into a definitive agreement for Staples to acquire Office Depot in February 2015 and the deal was expected to close by year end following customary closing conditions and antitrust regulatory approval.