Staples seeks US$2.1b deal for parent of Office Depot

[MASSACHUSETTS] Staples offered to buy the parent of Office Depot in a deal valuing the company at US$2.1 billion, the latest attempt to consolidate the office-products space to better compete against online retailers.

Closely held Staples, under the corporate name USR Parent, said it sent a letter to ODP laying out a plan to buy the company for US$40 per share in cash. That's 8.2 per cent above Friday's close, and Staples said it represents a 61 per cent premium over ODP's average closing price over the last 90 days.

ODP shares jumped as much as 17 per cent in New York trading. ODP didn't immediately respond to a request for comment.

A deal would bring together two of the biggest names in office supplies at a time when brick-and-mortar retailers are struggling to cope with broad economic shutdowns in the pandemic. Staples had previously tried to buy Office Depot, but the US$6.3 billion acquisition was called off in 2016 amid antitrust scrutiny.

Staples said it would consider upping its proposed valuation if Office Depot were to divest certain units, like its its CompuCom division or its US business-to-business unit.

Sycamore Partners-backed Staples has sufficient resources to finance the transaction, it said. If the target company doesn't cooperate, Staples said it will commence a tender offer in March. Certain Staples affiliates already own about 4.9 per cent of ODP's common stock, it said.

BLOOMBERG