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Office supply chain Staples recently informed shareholders that the Federal Trade Commission has once again rejected the company's bid to acquire rival Office Depot.
Staples announced its intent to purchase Office Depot back in February in a deal valued at around $6.3 billion. To the surprise of virtually nobody, the FTC said earlier this month that it would sue to block the deal as it believed a merger would reduce competition for office supplies sold to large companies.
Staples said in a brief press release that it proposed divesting up to $1.25 billion of commercial contracts in an effort to appease regulators. According to the office supply company, the FTC declined the offer without making a counteroffer. Nevertheless, Staples said it is willing to continue negotiations in hopes of crafting a deal to gain the agency's blessing (a process that includes litigation of its own).
A clause in the original agreement between the two companies stated that if regulators blocked the merger, Staples would pay Office Depot $250 million. That's far less than the $4 billion that AT&T handed T-Mobile after the FTC blocked its merger attempt in 2011 but still a significant figure.
Interestingly enough, this isn't the first time that regulators have stepped between the two office supply giants. Nearly 20 years ago, Staples unsuccessfully attempted to acquire Office Depot in a deal valued at $3.4 billion ($5.1 billion when adjusted for inflation).
Graphic courtesy The Wall Street Journal