Options for stationery and computer accessories are set to change after Framingham-based Staples, Inc. officially merges with Office Depot next year. Staples is acquiring its major rival in a $6.3 billion deal that should be completed by the end of this year. CEO Ron Sargent aims to reinvent the brand and move into areas beyond office supplies.
Office Depot acquired Office Max in 2013. The combined annual profits of all three companies reaches nearly $40 billion and the merger is expected to save Staples at least $1 billion. The deal came about in an effort to address the issue of Staples’ declining stock as well as the company’s increased focus on online sales instead of retail space.
In January, activist investor Starboard Value, who has a financial stake in both Staples and Office Depot, urged Sargent to pursue a merger. The idea was unanimously approved by the boards of directors of both companies, though the deal is still subject to the approval of regulators and Office Depot shareholders.
Office Depot, based in Boca Raton, Florida, will give shareholders $7.25 in cash and 0.2188 of a share in Staples when the merger is complete. In a statement, Staples responded to Starboard Value’s letter by saying they were open to “constructive dialogue” with shareholders as the merger moves forward.
Based on results from the last trading day prior to media reports of a merger, the deal values Office Depot shares at $11. That result indicates a 44-percent premium over the day’s closing price and a 65-percent premium over the previous 90-day closing price average for Office Depot shares, indications that the merger could be lucrative business for all involved.
