Staples Surges on Report That $6.5 Billion Sycamore Deal Is Near

  • Transaction would be the biggest yet for private equity firm
  • Bloomberg reported last month that Cerberus bid was rejected

What to Watch in the Staples-Sycamore Partners Deal

Staples Inc. shares surged the most in more than two months after the Wall Street Journal reported that Sycamore Partners is close to acquiring the retailer for more than $6.5 billion.

Sycamore, a private equity firm that focuses on consumer companies, is expected to pay more than $10 a share for Staples, the Journal reported. A deal could be announced as soon as Wednesday, the newspaper said.

Staples began considering a sale after U.S. regulators blocked a deal to buy smaller rival Office Depot Inc. last year. The thwarted takeover, which raised concerns it would create an unrivaled giant, sent Staples scrambling for a backup plan. With sales sputtering, the office-supply chain has been trying to recast itself as a seller of business services.

Bloomberg News reported last month that Staples had rejected a takeover offer from Cerberus Capital Management because it was too low. That left Sycamore in the running to acquire the retail chain, people familiar with the situation said at the time.

The Journal’s report sent Staples up as much as 8.5 percent to $9.94 on Wednesday, marking the biggest gain since April 4. The stock was up 1.2 percent this year through Tuesday’s close.

The rally put the stock just short of the reported price of more than $10 a share that the Journal reported. In a separate story, Reuters said that Sycamore is offering $10.25 a share.

Staples, based in Framingham, Massachusetts, didn’t immediately respond to a request for comment.

Last month, Staples reported its first-quarter sales dropped 4.9 percent from the previous year to $4.1 billion. It shuttered 18 stores in North America during that period, leaving it with 1,237 locations in the U.S. and 304 in Canada.

Sycamore, founded by Stefan Kaluzny and Peter Morrow, raised $2.5 billion for its second fund in 2014. The Staples acquisition would be the biggest deal to date for the firm, which focuses on consumer companies. It previously acquired department-store chain Belk Inc. for $2.7 billion.

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