Essendant, a distributor of workplace items with 2017 net sales of $5 billion, has accepted an acquisition bid from Staples.
Staples will acquire all of the outstanding shares of Essendant common stock for $12.80 per share in cash. The transaction value is $996 million including net debt, reflecting a 51% premium to Essendant’s share price on April 11.
The transaction follows the determination by Essendant’s board of directors, after consultation with legal and financial advisors, that the Staples bid constituted a “superior proposal” as defined in Essendant’s previously announced merger agreement to combine with Genuine Parts Co.’s S.P. Richards business. After a waiting period and with no counter proposal, Essendant terminated the previously established agreement under which GPC remains entitled to a $12 million break-up fee, one that Staples is paying as part of its acquisition agreement.
“After carefully evaluating Staples’ revised offer, including taking into account the extended regulatory process and risks associated with the S.P. Richards transaction and the continued challenges presented by the rapidly changing industry dynamics on our ability to realize value in combination with S.P. Richards, we are confident that the Staples transaction is in the best interest of Essendant shareholders,” said Charles Crovitz, Essendant chairman. “While our agreement to merge with S.P. Richards presented an attractive opportunity, we believe the Staples transaction provides superior and immediate value to our shareholders.”
The acquisition is expected to close in the fourth quarter.