Judge Denies Staples-Office Depot Merger

Staples-Office Depot

A federal court judge has ruled in favor of the Federal Trade Commission’s decision to block the proposed Staples-Office Depot merger, upholding the FTC’s December lawsuit which claimed the resulting monopolistic company would harm consumers by adversely affecting office supply prices.

The separate companies have been struggling in recent years, and saw the merger as a way to boost their fortunes. The stocks of both took a serious hit after the news was announced, as did those of electronics retailers like Best Buy and Conn’s that stood to benefit from store closures in a post-merger consolidation.

Office Depot Chairman and CEO Roland Smith viewed the ruling it as a setback for consumers and the two companies.

“While we are respectful of the Court’s decision to grant the FTC’s request for a preliminary injunction to prevent our merger with Staples, we are disappointed by this outcome and strongly believe that a merger would have benefited all of our customers in the long term,” Smith said.

He added Office Depot looked forward to “re-energizing” its business going forward, including capitalizing on the “remaining synergies and efficiencies” created through its 2013 merger with OfficeMax. Smith also said Office Depot will hold an investor conference call on May 16 to discuss next steps.

“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,” echoed Ron Sargent, chairman and CEO of Staples, adding it was in the best interests of all stakeholders to terminate the agreement. “We are positioning Staples for the future by reshaping our business, while increasing our focus on mid-market customers in North America and categories beyond office supplies.”

In the wake of the merger’s termination, Amazon may move ahead with its reported interest in Office Depot’s assets for its Amazon Business office supply unit.

Mike O’Brien is Senior Editor of Multichannel Merchant



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