In Staples’ third attempt to take over Office Depot, its acquisition offer was rejected by the ODP Corporation, Office Depot’s parent company. On January 11, Staples sent a letter to Office Depot’s board of directors offering to buy “100% of the issued and outstanding common stock” from its office-supply rival. At $40 per share, the deal to acquire Office Depot is over $2 billion.
“Staples believes that its all-cash transaction is a compelling value proposition for ODP’s stockholders that offers a high degree of certainty and is superior to the intrinsic, standalone value of ODP,” wrote Stefan Kaluzny, on behalf of the Board of Directors of USR Parent, Inc (Staples).
In response to Staples’ offer, the ODP corporation issued its own letter. “The Board has unanimously concluded that there is a more compelling path forward to create value for ODP and its shareholders than the potential transaction described in your proposal,” wrote ODP Chairman Joseph Vassalluzzo.
Although Office Depot refused Staples’ proposal, the company said it’s willing to make other alternative deals. “We are open to combining our retail and consumer-facing e-commerce operations with Staples under the right set of circumstances and on mutually acceptable terms,” wrote Vassalluzzo.
In the letter, Office Depot said it is willing to consider a joint venture where both companies “would equally share the risks and benefits.” The company would also consider a partial-sale of its retail and consumer-facing e-commerce operations.
If Staples is willing to come to either of those agreements, they will still require regulatory approval. But, Office Depot says their options offer a less “regulatory risk” by pursuing a retail-only transaction. And, will “help maintain competitiveness against nontraditional retailers and optimize ongoing choices for consumers.”
In 1997 and 2016, the Federal Trade Commission blocked the two companies from merging. Who’s to say it won’t happen again, even with the changes Office Depot is telling Staples to make in its offer.
“What we do not plan to do, however, is engage in a transaction that, as history has shown, would likely result in a prolonged and expensive regulatory review process with no guarantee of success, without a commitment that Staples is willing to bear this risk through a customary “hell or high water” provision,” wrote Vassaluzzo.
Until Staples is willing to come to an agreement with Office Depot that doesn’t include a full takeover, ODP’s answer is a firm “no”.
Veronica Garcia has a Bachelor of Journalism and Bachelor of Science in Radio/TV/Film from The University of Texas at Austin. When she’s not writing, she’s in the kitchen trying to attempt every Nailed It! dessert, or on the hunt trying to find the latest Funko Pop! to add to her collection.
