OZ Office Supply Retailer Finally Sold
One month after Wesfarmers pulled the plug on the sale of Officeworks the giant US office supply retailer Staples who also operates in Australia has been sold.
Staples moved into the Australian market via the acquisition of Corporate Express, that business is still up for sale as a separate entity.
In the USA Staples has agreed to be acquired by private equity firm Sycamore Partners for about US$6.9 billion in cash.
The deal is expected to close by December pending regulatory and shareholder approval, and comes 13 months after a merger plan with No. 2 rival Office Depot was dashed for a second time by the Federal Trade Commission last year.
New York-based Sycamore specializes in consumer and retail investments, with a portfolio that includes such chains and e-tailers as Belk, Coldwater Creek, Nine West, Talbots and The Limited. In a statement, managing director Stefan Kaluzny described Staples as a “truly outstanding enterprise,” citing its “iconic brand, winning strategy, and dedicated and passionate associates who are deeply focused on the customer.”
Kaluzny indicated that CEO Shira Goodman and her management team would remain in place as Sycamore helps accelerate the chain’s long-term profitability.
The partners will have their work cut out for them: Staples lost $815 million in its first fiscal quarter, ended April 29, and both it and Office Depot argued during their merger proceedings that competition from online merchants, big-box chains and warehouse clubs threaten their survival.
The deal was approved unanimously by Staples’ board, which believes it’s in the best interests of stockholders, Staples and its employees, chairman Robert Sulentic said.
Bloomberg said that the transaction lets Staples escape Wall Street’s glare and focus on a turnaround plan that includes reducing its retail footprint. But it’s hard to tell how the buyout will fix its fundamental challenges, including the rapid migration of customers to Amazon.com. and slackening demand for traditional office supplies.
“This doesn’t change the industry dynamics or the pressures the retailer faces,” said Seema Shah, an analyst at Bloomberg Intelligence.
Sycamore, saying it was attracted to Staples’ “iconic brand,” is paying $10.25 a share for the retailer, according to Wednesday’s statement. That represents a 12 percent premium to its share price on Tuesday, before reports surfaced that the transaction was close to be being completed.
Staples shares climbed as much as 2.1 percent on Thursday to $10.14 — still short of the acquisition price.