FRAMINGHAM, Mass. & BOCA RATON, Fla.–(BUSINESS WIRE)–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.
…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.
Oh, please. The regulators would not raise an objection if the entire Fortune 500 merged into one company called “BiteMeBitches LLC.”
And for those of you who say, “so what, I’ll buy my ink cartridges online” – here’s the ugly twin sister to the word monopoly: monopsony: a market form in which only one buyer interfaces with would-be sellers of a particular product.
In other words, if Staples is the only retailer that 3M realistically can sell its post-it notes to, well, then Staples can dictate for how much. It is essentially what Walmart is and what Amazon wants to be. The implications for this are HUGE, and hugely bad for all of us.
Side note: Staples was controlled by Mitt’s Bain Capitol, and he bragged about how he turned it around while on the campaign trail. So each time you plunk down $50 for an ink cartridge (the Monopoly side of the equation), you can feel really comfortable knowing you didn’t vote for Willard, though now you have the pleasure of sending him your money.