sfnsmcti

Staples Inc snaps up Office Depot for 6 billion to create officesupply

NEW YORK — Staples Inc is buying Office Depot in a cash-and-stock deal valued at nearly $6 billion.Office Depot Inc. shareholders will receive $7.25 in cash and 0.2188 of a share in Staples Inc. at closing. The deal values Office Depot at $11 per share. The companies put the transaction’s value at $6.3 billion.The deal is expected to close by year’s end.It’s not expected to have much impact on Staples operations in Canada, since Office Depot exited that market several years ago.Staples and Office Depot shares spike after report they’ve entered into merger talksA merger of Staples and Office Depot may help them weather the competition from online and big- box retailers in a way that RadioShack Corp. couldn’t.The three companies were all hit hard in the past decade by discount-offering giants such as Amazon.com Inc. and Wal-Mart Stores Inc. Their fates diverged this week. RadioShack is preparing to file for bankruptcy protection, while the other two — in a less dire situation — are combining.Staples and Office Depot shares are trading Tuesday at prices they haven’t reached in years as investors show support for their potential merger, which would consolidate the No. 1 and 2 office-supply chains. Analysts estimate $1 billion to $2 billion of costs could be cut through the deal, which may give the combined company some room to lower the prices of its products in hopes of drawing in shoppers.“From a financial standpoint and from a competition standpoint it makes sense,” Joseph Feldman, an analyst for Telsey Advisory Group in New York, told Bloomberg before the deal was announced. “Shareholders on both sides are cheering the deal. It probably would be a good thing to see happen for the industry and for both companies.”With file from Bloomberg

Leave a Reply

Your email address will not be published.Required fields are marked *