Staples welcomes 'dialogue' after investor call for merger

Courtesy of Staples Inc.

Write a Comment

By Emily Micucci

Framingham-based Staples Inc. has issued a statement welcoming “constructive” dialogue with shareholders after activist investor Starboard Value on Tuesday urged a merger with office supplies competitor Office Depot.

“Staples values constructive shareholder input and dialogue and regularly meets with its shareholders. The company has met and spoken with Starboard Value on several occasions to discuss their ideas,” the statement read, adding that the Staples board “carefully considers all actions that would create shareholder value and is committed taking actions that are in the best interest of all of the company’s shareholders.“

The company welcomes continued, constructive dialog with shareholders focused on enhancing the value of Staples,” the statement said.

Starboard Value sent the letter to Staples CEO Ronald Sargent on Tuesday, demanding that he begin working a deal with Office Depot, its smaller competitor.

“We believe that the best way to maximize value for Staples’ shareholders is through exploring and completing a business combination with Office Depot. For a variety of reasons, we believe that now is the right time to pursue such a transaction,” the letter read.

Starboard Value believes that a merger “would more than double the operating profits of the combined company and would create an industry-leading office supply retailer that could more effectively compete against larger retailers and online competitors.”

Starboard cited Staples’ rising stock price as evidence that shareholders largely support a merger with Office Depot; according to a research report by Credit Suisse, Staples’ share price has risen 50 percent since speculation about a merger began in September.

Bloomberg Businessweek reported that Starboard bought a larger stake in Office Depot and a new stake in Staples in December. Starboard was reportedly behind the 2013 merger of Office Depot and OfficeMax.