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
FRAMINGHAM, Mass. & BOCA RATON, Fla.--(BUSINESS WIRE)--Feb. 4, 2015--
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 Information
The 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 SEC
Staples
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 Statements
Statements 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 Staples
Staples 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 Depot
Formed 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
Source: Staples, Inc.
Staples Media Contact:
Kirk Saville, 508-253-8530
or
Staples
Investor Contact:
Chris Powers, 508-253-4632
or
Office
Depot Media Contact:
Karen Denning, 630-864-6050
or
Office
Depot Investor Contact:
Mike Steele, 561-438-3657