Staples calls off $6B merger, 50 store closings expected
Courtesy Staples
The $6.3-billion merger between Staples and Office Depot has been called off by the two office supply companies with Framingham-based Staples saying store closings and other cuts will follow.
The merger broke apart after the U.S. District Court for the District of Columbia’s ruling granted the Federal Trade Commission’s request for a preliminary injunction to block the acquisition. Staples and Office Depot had been fighting the FTC for the right to merge. As part of calling off the merger, Staples will pay Office Depot a $250-million break-up fee, the company announced in a release.
“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,” Ron Sargent, Staples’ chairman and chief executive officer, said in a statement. “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 cancellation of the merger will have other impacts for the Framingham company. Company officials plan to terminate its agreement to sell more than $550 million in large corporate contract business and related assets to Essendant. Staples will begin a multi-year cost savings plan estimated to generate approximately $300 million of annualized pre-tax cost savings by the end of 2018. The company plans to close at least 50 stores in North America in 2016.
The company is also planning on heavily pursuing the mid-market of customers with 10 to 200 employees. As a part of this, the company will focus on lower prices and improved supply chain capabilities and add more than 1,000 associates to its mid-market sales force.
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