Office Depot rebuffed an unsolicited takeover offer from Staples but indicated it is open to an alternative deal, the latest twist in a yearslong dance between the office-supply retailers.
Staples on Jan. 11 proposed to buy Office Depot’s parent, ODP Corp., for more than $2 billion or $40 a share. Staples said it would pursue a public tender offer for ODP’s shares in March if the companies don’t reach agreement on a deal.
ODP has concluded that a sale of its retail and consumer-facing e-commerce operations to Staples or a joint venture is preferable to a full takeover, according to a letter sent by ODP’s chairman to an official of the private-equity firm that controls Staples. It said in the letter, seen by The Wall Street Journal, that such a deal would afford the same cost savings as a full-company sale but be less likely to attract prolonged regulatory scrutiny.
Staples’ recent bid marks the third time it has tried to acquire its main bricks-and-mortar rival. Previous efforts, including a $6.3 billion proposal five years ago, were blocked by antitrust enforcers. Staples was taken private by Sycamore Partners in 2017 and is now controlled by a subsidiary of the buyout firm called USR Parent Inc.
In a sign that investors anticipate a deal of some sort, ODP shares have climbed 24% since USR disclosed its bid, closing at $45.86 Friday. A tie-up of the office-suppliers’ retail operations could generate significant cost-savings if the combined company reduces its footprint by closing overlapping stores.
