Combined Company Better Positioned to Serve
the Changing Needs of Customers and Compete Against a Large and
Diverse Set of Competitors
Strategic Combination Expected to Deliver at
Least $1 Billion of Annualized Synergies by Third Full Fiscal Year
Post-Closing
Cost Savings and Operational Efficiencies to
Dramatically Accelerate Staples’ Strategy of Driving Growth in
Delivery Businesses and Categories Beyond Office Supplies
Provides Ability to Optimize Retail
Footprint
Generates Significant Value for
Shareholders; Accretive to EPS in First Year
Post-Closing1
Staples, Inc. (Nasdaq: SPLS) and Office Depot, Inc. (Nasdaq:
ODP) today announced that the companies have entered into a
definitive agreement under which Staples will acquire all of the
outstanding shares of Office Depot. Under the terms of the
agreement, Office Depot shareholders will receive, for each Office
Depot share, $7.25 in cash and 0.2188 of a share in Staples stock
at closing. Based on Staples closing share price on February 2,
2015, the last trading day prior to initial media speculation
around a possible transaction, the transaction values Office Depot
at $11.00 per share. This represents a premium of 44 percent over
the closing price of Office Depot shares as of February 2, 2015,
and a premium of 65 percent over the 90-day average closing price
of Office Depot shares as of February 2, 2015. The transaction
values Office Depot at an equity value of $6.3 billion.
Staples began discussions to acquire Office Depot in September
2014. The agreement has been unanimously approved by each company’s
Board of Directors. With the acquisition of Office Depot, Staples
will have pro forma annual sales of approximately $39 billion.
“This is a transformational acquisition which enables Staples to
provide more value to customers, and more effectively compete in a
rapidly evolving competitive environment,” said Ron Sargent,
Staples’ chairman and chief executive officer. “We expect to
recognize at least $1 billion of synergies as we aggressively
reduce global expenses and optimize our retail footprint. These
savings will dramatically accelerate our strategic reinvention
which is focused on driving growth in our delivery businesses and
in categories beyond office supplies.”
“This transaction delivers great value for our shareholders and
creates a company ideally positioned to serve our customers and
grow over the long term,” said Roland Smith, chairman and chief
executive officer for Office Depot, Inc. “It is also an endorsement
of our many accomplishments and the tremendous success we’ve had
integrating Office Depot and OfficeMax over the past year. We look
forward to bringing our experience and knowledge to the new
organization.”
Staples expects to generate at least $1 billion of annualized
cost synergies by the third full fiscal year post-closing. The
majority of these synergies would be realized through headcount and
general and administrative expense reductions, efficiencies in
purchasing, marketing, and supply chain, retail store network
optimization, as well as sharing of best practices. Staples
estimates one-time costs of approximately $1 billion to achieve its
synergy target.
Following the closing of the transaction, Staples’ newly
constituted Board of Directors will increase in size from 11
members to 13 members and include two Office Depot directors
approved by Staples. Staples’ corporate headquarters will remain in
Framingham, Mass. and Sargent will continue to serve as Staples’
Chairman and Chief Executive Officer.
In connection with the acquisition, Staples has obtained
financing commitments from Barclays and BofA Merrill Lynch for a $3
billion ABL credit facility, and a $2.75 billion 6-year term loan.
The closing of the transaction is not subject to financing
conditions. Staples is committed to maintaining its current
quarterly dividend of $0.12 per share and has temporarily suspended
its share buyback program to focus on paying down transaction
related debt. Staples is committed to a prudent capital structure
that maximizes financial flexibility and supports a balanced and
diverse cash deployment strategy, including the resumption of share
buybacks over the longer term.
The transaction is subject to customary closing conditions,
including antitrust regulatory approval and Office Depot
shareholder approval, and is expected to close by the end of
calendar year 2015. Staples will remain focused on its strategic
reinvention plan, and Office Depot will remain focused on its
integration of OfficeMax during this period.
Barclays is acting as exclusive financial advisor to Staples.
Wilmer Cutler Pickering Hale and Dorr LLP and Weil, Gotshal &
Manges LLP are acting as legal advisors to Staples. Peter J.
Solomon Company is acting as exclusive financial advisor to Office
Depot. Simpson Thacher & Bartlett LLP is acting as legal
advisor to Office Depot.
Conference Call and Webcast InformationThe management
teams of Staples and Office Depot will hold a joint conference call
and simultaneous webcast today, February 4, 2015 at 8:00 a.m. (ET)
to discuss the transaction. Participants will include Ron Sargent,
Staples’ Chairman and Chief Executive Officer, Christine Komola,
Staples’ EVP and Chief Financial Officer, and Roland Smith, Office
Depot’s Chairman and Chief Executive Officer. To access the
conference call, dial 617-399-5130. The passcode is 62894773. To
access the webcast, visit the Investor Relations section of
Staples’ website at http://investor.staples.com. A replay of the
webcast will be available online at
http://investor.staples.com.
Important Additional Information will be Filed with the
SECStaples plans to file with the SEC a Registration Statement
on Form S-4 in connection with the transaction and Office Depot
plans to file with the SEC and mail to its stockholders a Proxy
Statement/Prospectus in connection with the transaction. The
Registration Statement and the Proxy Statement/Prospectus will
contain important information about Staples, Office Depot, the
transaction and related matters. Investors and security holders are
urged to read the Registration Statement and the Proxy
Statement/Prospectus carefully when they are available.
Investors and security holders will be able to obtain free
copies of the Registration Statement and the Proxy
Statement/Prospectus and other documents filed with the SEC by
Staples and Office Depot through the website maintained by the SEC
at www.sec.gov.
In addition, investors and security holders will be able to
obtain free copies of the Registration Statement and the Proxy
Statement/Prospectus from Staples by contacting Staples’ Investor
Relations Department at 800-468-7751, or from Office Depot by
contacting Office Depot’s Investor Relations Department at
561-438-7878.
Staples and Office Depot, and their respective directors and
executive officers, may be deemed to be participants in the
solicitation of proxies in respect of the transactions contemplated
by the Merger Agreement. Information regarding the Staples’
directors and executive officers is contained in Staples’ proxy
statement dated April 11, 2014, which is filed with the SEC.
Information regarding Office Depot’s directors and executive
officers is contained in Office Depot’s proxy statement dated March
24, 2014, which is filed with the SEC. To the extent holdings of
securities by such directors or executive officers have changed
since the amounts printed in the 2014 proxy statements, such
changes have been or will be reflected on Statements of Change in
Ownership on Form 4 filed with the SEC. More detailed information
regarding the identity of potential participants, and their direct
or indirect interests, by security holdings or otherwise, will be
set forth in the Proxy Statement/Prospectus to be filed by Office
Depot in connection with the transaction.
Safe Harbor for Forward-Looking StatementsStatements in
this press release regarding the proposed transaction between
Staples and Office Depot, the expected timetable for completing the
transaction, future financial and operating results, benefits and
synergies of the transaction, future opportunities for the combined
company, and any other statements about Staples’ or Office Depot’s
managements’ future expectations, beliefs, goals, plans or
prospects constitute forward looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any
statements that are not statements of historical fact (including
statements containing “believes,” “anticipates,” “plans,”
“expects,” “may,” “will,” “would,” “intends,” “estimates” and
similar expressions) should also be considered to be forward
looking statements. There are a number of important factors that
could cause actual results or events to differ materially from
those indicated by such forward looking statements, including: the
ability to consummate the transaction; the risk that Office Depot’s
stockholders do not approve the merger; the risk that regulatory
approvals required for the merger are not obtained or are obtained
subject to conditions that are not anticipated; the risk that the
financing required to fund the transaction is not obtained; the
risk that the other conditions to the closing of the merger are not
satisfied; potential adverse reactions or changes to business or
employee relationships, including those resulting from the
announcement or completion of the merger; uncertainties as to the
timing of the merger; competitive responses to the proposed merger;
response by activist shareholders to the merger; uncertainty of the
expected financial performance of the combined company following
completion of the proposed transaction; the ability to successfully
integrate Staples’ and Office Depot’s operations and employees; the
ability to realize anticipated synergies and cost savings;
unexpected costs, charges or expenses resulting from the merger;
litigation relating to the merger; the outcome of pending or
potential litigation or governmental investigations; the inability
to retain key personnel; any changes in general economic and/or
industry specific conditions; and the other factors described in
Staples’ Annual Report on Form 10-K for the year ended February 1,
2014 and Office Depot’s Annual Report on Form 10-K for the year
ended December 28, 2013 and their most recent Quarterly Reports on
Form 10-Q each filed with the SEC. Staples and Office Depot
disclaim any intention or obligation to update any forward looking
statements as a result of developments occurring after the date of
this press release.
About StaplesStaples makes it easy to make more happen
with more products and more ways to shop. Through its world-class
retail, online and delivery capabilities, Staples lets customers
shop however and whenever they want, whether it’s in-store, online
or on mobile devices. Staples offers more products than ever, such
as technology, facilities and breakroom supplies, furniture, safety
supplies, medical supplies, and Copy and Print services.
Headquartered outside of Boston, Staples operates throughout North
and South America, Europe, Asia, Australia and New Zealand. More
information about Staples (SPLS) is available at
www.staples.com.
About Office DepotFormed by the merger of Office
Depot and OfficeMax, Office Depot, Inc. is a leading
global provider of products, services, and solutions for every
workplace – whether your workplace is an office, home, school, or
car.
Office Depot, Inc. is a resource and a catalyst to help
customers work better. We are a single source for everything
customers need to be more productive, including the latest
technology, core office supplies, print and document services,
business services, facilities products, furniture, and school
essentials.
The company has combined pro forma annual sales of
approximately $17 billion, employs more than 58,000
associates, and serves consumers and businesses in 57 countries
with more than 2,000 retail stores, award-winning e-commerce sites
and a dedicated business-to-business sales organization – all
delivered through a global network of wholly owned operations,
joint ventures, franchisees, licensees and alliance partners. The
company operates under several banner brands including Office
Depot, OfficeMax, OfficeMax Grand & Toy, Reliable and Viking.
The company’s portfolio of exclusive product brands include TUL,
Foray, DiVOGA, Ativa, WorkPRO, Realspace and HighMark.
Office Depot, Inc.’s common stock is listed on the NASDAQ Global
Select Market under the symbol ODP. Additional press information
can be found at: http://news.officedepot.com.
1 Excluding one-time integration and restructuring costs and
purchase accounting adjustments
Staples Media Contact:Kirk Saville,
508-253-8530orStaples Investor Contact:Chris Powers,
508-253-4632orOffice Depot Media Contact:Karen Denning,
630-864-6050orOffice Depot Investor Contact:Mike Steele,
561-438-3657
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