Persistent Staples wins Corporate Express

Corporate Express has agreed to be acquired by Staples for
€9.25 (£7.31) a share, four months after Staples’
initial bid. The resultant company, which retains the Staples
name, is a behemoth in the office supplies market, with annual
turnover of approximately €18 billion (£14.14
billion), making it the largest company in the sector. Corporate
Express chief executive Peter Ventress will become president of
Staples International, a new role that will oversee activities
outside the US and Canada.

Unlike Staples, Corporate Express does not have stores. But it
has two things that Staples doesn’t: a strong contract business
in Europe and Canada, and a presence in Australia and New
Zealand, where its sales for 2007 totalled €796 million.

On 19th February, Corporate Express rejected an unsolicited
takeover bid of €2.5 billion (£1.88 billion) from
Staples. Staples upped the offer by 10 percent in May, but
Corporate Express turned that down as well. On 19th May, Staples
took the bid directly to Corporate Express’s shareholders,
offering approximately €2.8 billion, or €8 per share.
Staples then bought more than 22 million shares of Corporate
Express, giving it a 12.3-percent stake in the company. On 5th
June, Corporate Express finally opened its books to Staples, and
on 11th June the companies announced that Staples’ final offer,
valuing Corporate Express at €3.1 billion, had been
accepted. The European Commission cleared the application on 17th
June. As part of the deal, Corporate Express has agreed not to
complete its proposed acquisition of French firm Lyreco, which it
had announced on 21st May.

The Staples-Corporate Express deal makes the terrain much more
challenging for competitors. For instance, Credit Suisse recently
downgraded its rating of Office Max, citing the acquisition as
the reason for the company’s “more precarious strategic
position”. Office Max shares fell almost 5 percent
following the investment firm’s note.

Published: 3rd July 2008


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