Staples Acquires Office Depot for $6.3 Billion
February 4, 2015 – Office-supplies superstore Staples reports that it’s acquired rival Office Depot for $6.3 billion, and that with the acquisition of Office Depot, it’ll have annual sales of approximately $39 billion.
“This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment,” commented Ron Sargent, Staples’ chairman and chief executive officer. “We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies.”
“This transaction delivers great value for our shareholders and creates a company ideally positioned to serve our customers and grow over the long term,” said Roland Smith, chairman and chief executive officer for Office Depot. “It is also an endorsement of our many accomplishments and the tremendous success we’ve had integrating Office Depot and OfficeMax over the past year. We look forward to bringing our experience and knowledge to the new organization.”
Staples expects to generate at least $1 billion of annualized cost savings by the third full fiscal year after the closing. It says the majority of these savings will be realized through headcount and general and administrative expense reductions, efficiencies in purchasing, marketing, and supply chain, and retail-store network optimization. It estimates one-time costs of approximately $1 billion to achieve its target.
Following the closing of the transaction, Staples’ newly constituted board of directors will increase in size from 11 members to 13 members and include two Office Depot directors approved by Staples. Staples’ corporate headquarters will remain in Framingham, Massachusetts, and Sargent will continue to serve as Staples’ chairman and chief executive officer.
Staples says it’s obtained financing commitments from Barclays and BofA Merrill Lynch for a $3 billion credit facility, and a $2.75 billion six-year term loan. The transaction is subject to customary closing conditions, including antitrust regulatory approval, and Office Depot shareholder approval, and is expected to close by the end of 2015.