The nation’s two largest office superstores will soon be one as Staples and Office Depot have entered into a definitive agreement under which Staples will acquire all of the outstanding shares of Office Depot.
The deal, much discussed on Tuesday, was officially announced by the retailers Wednesday morning via a joint press release.
“This is a transformational acquisition that enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment,” said Ron Sargent, Staples’ chairman and chief executive officer. “We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint.”
Roland Smith, Office Depot chairman and CEO, said the deal is an endorsement of his company’s accomplishments and success in integrating Office Depot and OfficeMax over the past year. Office Depot and OfficeMax merged in 2013.
Under the terms of the agreement, Office Depot shareholders will receive, for each Office Depot share, $7.25 in cash and 0.2188 of a share in Staples stock. Based on Staples closing share price on February 2, the last trading day prior to initial media speculation around a possible transaction, the transaction values Office Depot at an equity value of $6.3 billion.
Staples officials said the $1 billion of “synergies” mentioned by Sargent would be realized through headcount and general and administrative expense reductions, efficiencies in purchasing, marketing, and supply chain, retail store network optimization, as well as sharing of best practices.