A judge has blocked the proposed merger of Staples and Office Depot due to antitrust concerns, and the retailers have said they won't appeal the injunction and will instead call off the proposed merger.
Under the terms of the merger agreement, Staples will pay Office Depot a $250 million break-up fee. Staples also plans to terminate its agreement to sell more than $550 million in large corporate contract business and related assets to Essendant.
"We are extremely disappointed that the FTC's request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case," said Ron Sargent, Staples' chairman and CEO. "We believe that it is in the best interest of our shareholders, customers and associates to forego appealing this decision, terminate the merger agreement and move on with our strategic plan to drive shareholder value. We are positioning Staples for the future by reshaping our business, while increasing our focus on midmarket customers in North America and categories beyond office supplies."
Staples will focus on midmarket businesses with 10 to 200 employees and plans to pursue market share gains in core categories like office supplies, ink, toner and paper. To support its growth plans, the company said it will invest in lower prices and improved supply chain capabilities and add more than 1,000 associates to its midmarket sales force.
European operations are also being reexamined and the retailer will close roughly 50 locations in North America this year.
It's been a yearlong odyssey for Staples and Office Depot – Staples originally agreed to buy Office Depot for $6 billion in February 2015 and agreed to make concessions and sell assets in order to win FTC approval.
- see this Staples announcement
- see this Bloomberg story
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