Staples (NYSE:SPLS) announced that it has reached an agreement to fully acquire its competitor Office Depot (NASDAQ:ODP) for $6.3 billion.
Staples began discussions to acquire Office Depot back in September of 2014. While both companies' boards were in agreement, there were still legal hurdles to jump through.
The two companies previously tried to merge back in the 1990s, but the deal was squashed by antitrust regulatory opposition from the Federal Trade Commission.
Today, combined annual sales are estimated to be around $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 CEO. "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."
Office Depot is no stranger to mergers, as it acquired OfficeMax for $1.2 billion at the close of 2013.
Following the close of the transaction, Staples' new board will increase from 11 to 13 members and include Office Depot directors. Corporate headquarters will remain in Framingham, Massachusetts, and Sargent will continue at the helm.
Just last week, activist investor Starboard Value was pushing for a merger, saying a combined office supply chain would lead to greater savings. Plus, the merger will create synergies of at least $2 billion, more than double the current operating profits, according to Starboard's founder and CEO Jeffrey Smith. This is good news for Staples, which announced back in March that it planned to shut down 225 stores throughout North America, accounting for 12 percent of its brick-and-mortar locations in the region, as part of the company's attempt to cut costs and achieve greater efficiency as it competes with the likes of Amazon (NASDAQ:AMZN).
While the transaction is subject to antitrust regulatory approval and Office Depot shareholder approval, the deal is expected to close by the end of 2015.
-See this Staples press release
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