Staples and Sycamore Partners, a leading private equity firm, announced that they have entered into a merger agreement in which investment funds managed by Sycamore Partners will acquire the retailer for $6.9 billion.
News that the office-supply retailer was up for sale has been widely reported since early spring, and began to ramp up in the last few weeks as reports surfaced that Sycamore was in the mix, culminating in the merger announcement. While neither Sycamore nor Staples has made a statement on the future direction of the company, it is widely assumed that the retailer will be focusing on building its business services capabilities.
The “announcement is the result of a comprehensive process in which our board, with the assistance of a transaction committee comprised of independent directors, and outside financial advisors, explored and considered various alternatives to enhance value for our stockholders,” said Robert Sulentic, chairman of the board, Staples. “Staples’ Board believes that this process has led to a transaction which is in the best interests of our stockholders, as well as Staples and its employees.”
Staples has struggled to find its place in the new retail marketplace as consumers have increasingly turned to Amazon and others for their office-supply needs. Over the past few years Staples has focused on building its business-to-business revenue stream with the introduction of B2B omnichannel retailing.
“With an iconic brand, a winning strategy, and dedicated and passionate associates who are deeply focused on the customer, Staples is truly an outstanding enterprise,” said Stefan Kaluzny, managing director of Sycamore Partners. “We have tremendous confidence in CEO Shira Goodman and great respect for the Staples management team and are excited about this opportunity to partner with them to accelerate long-term profitability.”
Under the terms of the merger agreement, all Staples’ stockholders will receive $10.25 per share in cash for each share of common stock they own, which represents a premium of approximately 20% to the 10-day volume weighted average stock price for Staples shares for the period ended April 3, 2017, the last trading day prior to widespread media speculation about a potential transaction.
The transaction is subject to customary closing conditions, including the receipt of regulatory and stockholder approval, and is expected to close no later than December, 2017. The closing is not subject to a financing condition.