Staples Says Office Depot Deal Is Dead If Judge OKs Injunction
Staples Inc. will walk away from its yearlong effort to purchase Office Depot Inc. if a judge grants a preliminary injunction from the U.S. Federal Trade Commission, which is seeking to block the deal.
The injunction hearing is due to begin this month, with U.S. District Judge Emmet Sullivan ruling on the case by May 10. If the Sullivan sides with the FTC, “the acquisition of Office Depot is over from our perspective,” Staples said on a conference call on Friday.
Staples has already been preparing for life without an Office Depot merger, a deal that would have unified the two largest office-supply chains in the U.S. In January, the company shook up management and pledged to make its business more efficient, saying it may need to compete solo.
The Federal Trade Commission sued to block the transaction in December, arguing that a merger would squelch competition and raise prices for customers. Staples previously tried to buy Office Depot in the 1990s and was thwarted by the FTC.
As part of a “Plan B” scenario if the Office Depot bid fails, Staples said it will look to drive growth in categories outside of office supplies. It also plans to close more low-performing stores. The company’s latest results, released earlier on Friday morning, missed predictions. Staples posted earnings of 26 cents a share in the fourth quarter, excluding some items, compared with the 28 cents analysts had projected. Sales slipped to $5.27 billion, short of the $5.4 billion estimate.
The stock tumbled as much as 6 percent to $9.28 in New York.