Staples making another bid for Office Depot

Photo | Grant Welker Staples headquarters in Framingham

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By Grant Welker

It's been nearly five years since a plan for Staples to buy competitor Office Depot fell through. Now the Framingham office retailer is trying again.

Staples' board of directors sent a letter to counterparts at Office Depot's parent company, ODP Corp., on Monday with an offer to buy the company for $40 per share in cash. That's a roughly 8% premium over where ODP shares were trading at the end of the day last Friday, and what Staples said was a 61% premium over where the company's shares were trading in the past 90 days.

Shares of ODP, which has a market size of more than $2.2 billion, were trading at more than $42 on Monday morning after the proposed acquisition was reported.

"Staples believes that its all-cash transaction is a compelling value proposition for ODP's stockholders that offers a high degree of certainty and is superior to the intrinsic, standalone value of ODP," Staples said in a statement.

The proposed acquisition is the second go-around for Staples and Florida-based Office Depot.

The first attempt, valued at $6.3 billion, was called off by the two companies in 2016 after a U.S. District Court ruling granted the Federal Trade Commission’s request for a preliminary injunction to block the deal. Staples paid Office Depot a $250 million fee after the deal was scuttled, and Staples later reported the failed deal cost it $340 million in all. That deal was followed by dozens of store closures that further shrunk Staples' brick-and-mortar footprint.

Things have changed for Staples since then. Today, the company is owned by Sycamore Partners, a private firm that paid $6.9 billion for Staples in 2017 and brought it into a line-up of retailers that also includes Coldwater Creek, Hot Topic, Nine West, Talbots and The Limited. Two years later, Staples paid $500 million for Essendant, an Illinois wholesale office supplier. In early 2020, Staples sold its longtime headquarters for $165 million to LCN Capital Partners, a New York firm specializing in sale-leaseback deals.

Staples said Monday a regulatory process of a new acquisition of Office Depot would take at least six months. That process could include the divestiture of a Office Depot commercial business unit to satisfy regulatory concerns.