Tag: merger

Amazon has sent shockwaves through the food retailing business with its near $14-billion acquisition of natural and organic food chain Whole Foods.

The move has dominated the financial news over the past three days and has been called a game-changer for the food retailing industry, but could there be wider ramifications for the business supplies industry? We suggest a few things to think about…

Whole Foods locations could be used as collection points for Amazon online sales, providing customers with more delivery options.

Whole Foods stores could act as local distribution hubs for fast delivery, two hours or even less, and give Amazon a stronger last-mile delivery presence.

Amazon’s move could have a disruptive effect on the wider food retailing industry. There is already speculation about the need for accelerated consolidation in the mass and grocery sector, and if that happened that would affect vendors that sell into these retailers.

Amazon has been testing more consumer-friendly retail concepts, such as its Amazon Go initiative where customers just pick items off shelves without the need to go through a checkout. Acquiring Whole Foods will give it a wider test platform and could lead to faster adoption of some of these shopping innovations as well as speeding up digital transformation in the retail sector in general.

We have previously downplayed the idea of Amazon acquiring retail locations in the business supplies channel because there was no indication that it would make a significant move into the retail space. That has now changed, and the Whole Foods deal validates Amazon’s belief in an omnichannel experience that combines the digital and physical worlds.

Could this mean that Amazon now looks to acquire retailers in other business segments, such as office supplies, and that Staples or Office Depot’s stores could be on the Amazon radar? Possibly, especially if Amazon is not happy with the way that Amazon Business is growing; it hasn’t updated its customer and sales figures on Amazon Business in the US since April 2016. Is that because the growth rate has slowed and it’s not getting the traction it thought it would after Amazon Business’ initial success?

The Whole Foods acquisition is reportedly being driven by difficulties Amazon was having in growing its Amazon Fresh grocery delivery business. If Amazon Business is stalling or not growing fast enough, then why wouldn’t Amazon look at buying growth? We now know that this strategy is part of Amazon’s playbook.

By Andy Braithwaite for OPI.net

Shoprite, Steinhoff deal called off

South Africa’s Steinhoff’s and grocery retailer Shoprite have called off a potential deal to create an African retail giant.

In a joint statement, the two firms said “the fact that the relevant parties could not reach an agreement in respect of the Share Exchange resulted in the negotiations being terminated.”

As a result both companies saw a notable increase in their respective stock prices with Steinhoff’s shares in Johannesburg rising more than 7% since the announcement, while Shoprite’s stock jumped more than 6%.

The deal was the idea of retail magnate Christo Wiese, who owns 16% of Shoprite and 23% of Steinhoff, and would have given Steinhoff a major interest in the R110-billion Shoprite.

According to the Global Powers of Retailing list published in Janaury 2017, Steinhoff International, a manufacturer and retailer of mostly furniture and household goods, is currently the biggest retailer in the country and 72nd in the world.

Shoprite Holdings is the second biggest retail brand in the country, ranked 110th.

Source: www.businesstech.co.za

The failed marriage of Office Depot and Staples has claimed another CEO. Nearly three months after Staples chief Ron Sargent made his sad exit, the Depot’s top exec Roland Smith announced his departure.

Smith isn’t leaving immediately but will remain as CEO until a successor is named, so tell Shannon in marketing she can stop pretending to casually stand near his office because we all know she’s just trying to call dibs on his sweet desk blotter.

The outgoing CEO, who hasn’t even been with Office Depot for three full years, is also expected to retain his spot as Chairman of the Office Depot board, according to a statement from the company.

“My decision to retire has not been an easy one. In 2013, I set aside a number of personal ambitions to accept a three-year contract with Office Depot, and it’s now time for me to refocus on those priorities,” says Smith in a statement. “I am extraordinarily proud of what the Office Depot team has accomplished these past three years, and I am confident that we will successfully execute our new strategy and grow shareholder value.”

In Feb. 2015, Staples and Office Depot announced a $6,3-billion merger, nearly two decades after federal antitrust regulators blocked the retailers’ first marriage. Then earlier this year, the Federal Trade Commission sued to block this latest deal,

After nearly a year of investigating the deal, the Federal Trade Commission sued to block the merger, arguing that further consolidation would harm competition nationwide in the market for “consumable” office supplies – pens, paper, sticky notes, etc. – sold to large business customers.

In May 2016, a federal judge sided with the government, putting an end to merger, and to the careers of Sargent and Smith, who joined Office Depot while it was in the middle of successfully acquiring OfficeMax.

Earlier this month, Office Depot announced it would close 300 stores on top of the 400 it had already planned to close by the end of 2016.

By Chris Morran for www.consumerist.com

Three months after its proposed tie-up with larger rival Staples failed regulatory muster, Office Depot has said it will launch a quarterly dividend and close an additional 300 stores as it charts a course for remaining a stand-alone company.

Office Depot completed its strategic review of the business and announced moves such as growing its contract channel, optimising retail operations in North America, implementing multiyear cost reductions and returning capital to shareholders.

Meanwhile, the company said Wednesday it swung to a profit in the latest period, helped in large part by the $250-million breakup fee it had received from Staples, and its revenue was lower. The earnings result, excluding the one-time fee and other special items,declined from a year ago, missing Wall Street expectations.

The company plans to trim $250-million in costs by 2018 and initiated a quarterly dividend program at 2.5 cents a share, payable on Sept. 15 to shareholders of record by Aug. 25. The company didn’t specify job cuts were part of its plan to trim expenses but said it would lower overall general and administrative costs.

Office Depot closed 42 stores in the second quarter, ending the period with 1 513 stores in North America as part of its earlier plan to close 400 stores. But Wednesday it said it would close an additional 300 stores on top of that.
Staples agreed in February 2015 to buy Office Depot for about $6.3-billion. In 2013, the U.S. Federal Trade Commission approved Office Depot’s takeover of the smaller OfficeMax. But the FTC argued its tie-up with Staples would mean higher prices and fewer options for big companies that buy office supplies in bulk.

In all for the June quarter, Office Depot earned $210-million, or 38 cents a share, compared with a year-earlier’s loss of $58-million, or 11 cents a share. Excluding items, earnings were three cents a share, compared with six cents a year earlier. Revenue slipped 6% to $3.22-billion.

Analysts surveyed by Thomson Reuters had projected per-share earnings of six cents on revenue of $3.21-billion.
Shares were inactive in premarket trading.

By Joshua Jamerson for www.wsj.com

Office Depot and Staples called off their plans to merge, triggering a trading halt for the companies’ stocks  Tuesday.

The retailers made the announcement after a federal judge granted a preliminary injunction Tuesday that had been requested by the Federal Trade Commission, which opposed Staples’ plan to acquire Office Depot for $6,3-billion.

Now the companies “plan to terminate their merger agreement”, Staples said in a statement.

The FTC argued in December last year that combining the two companies would give them too large a chunk of the office supply retail market — which would violate antitrust law.

“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,” Staples CEO Ron Sargent said in a statement.

The NASDAQ halted trading of both companies’ stock around 6:30 pm ET on Tuesday.

It’s the second time the FTC has blocked a merger of the two office suppliers, having halted their merger previously in 1997.

Staples and Office Depot have faced intense competition from retail stores that are not traditional office suppliers like Amazon (AMZN, Tech30) and Wal-Mart (WMT). The industry is also reeling from a decline in printing activities among young consumers, many of whom don’t even own printers.

Profits at both Staples and Office Depot have shrunk in recent years. Last year, Staples announced plans to shut 225 stores in North America.

But the FTC wasn’t focused on competition over dwindling shoppers for office supplies. Instead, the agency pointed to the market for large business customers, where Staples and Office Depot are often the top two bidders.

“By eliminating competition between Staples and Office Depot, the transaction would lead to higher prices and reduced quality,” the FTC said in a statement last December.

The companies had hoped the merger would help create over $1-billion in annual savings.

By Jackie Wattles for www.money.cnn.com

Boca Raton-based Office Depot says regulatory roadblocks are disrupting its business as Staples tries to buy the company.

The office supply giant reported a 9% decrease in sales in the first quarter of 2016, to $3,5-billion from $3,9-billion year-over-year. Its operating income plummeted 19,32% to $71-million in the first quarter of 2016 from $88-million in the first quarter of 2015.

Its net income in the first quarter of 2016 also decreased 2%, to $45-million, or 8 cents a share, from $46-million or about 8 cents a share.

“The protracted regulatory review of the pending Staples acquisition continues to have a substantial disruptive impact on our business,” says Roland Smith, chairman and CEO for Office Depot, in a statement.

“Our North American Business Solutions Division and International Division are more impacted by this disruption and accordingly, both failed to meet our sales and profit expectations this quarter. In spite of the uncertainty surrounding the acquisition, our associates around the world continue to demonstrate focus, drive and dedication as we finalise this process.”

The preliminary injunction hearing has resumed after ending abruptly when Staples asked that the U.S. government’s lawsuit against the company for its proposed $6 billion buyout of Office Depot be thrown out, and its lawyers would not call any witnesses. U.S. District Judge Emmet Sullivan is expected to make a decision on the case May 10.

Staples, based in Framingham, Massachusetts, entered into an agreement to acquire Office Depot on Feb. 4, 2015. Although the company received approvals from regulatory agencies across the world where the companies do business, the US Federal Trade Commission sued Staples in December to block the number and number 2 office supply companies from becoming one corporation.

Office Depot employs about 2 000 high-paid workers in South Florida, but Staples says its headquarters will remain in Massachusetts if the acquisition moves forward.

By Emon Reiser for www.bizjournals.com

The first day of the federal court hearing in which Staples and Office Depot are making their cases about whether a proposed merger of the two companies would be beneficial to or terrible for consumers began on 21 March.

Both sides made their opening arguments. The FTC is concerned about possible price hikes for consumers, and the two office supply companies are concerned that Amazon is going to crush them.

The argument hinges on an important question: are Fortune 500 companies likely to go shopping for their office supplies on Amazon? While we think of the stores and consumer-facing websites when we think about these two chains, their commercial supply businesses are a lot more lucrative. They are the FTC’s main concern in preventing this merger, not necessarily the retail part of the office-supply business.

In today’s opening statements, an attorney for Staples shared e-mails from representatives of companies, who were concerned that that might face higher prices if one mega-Staples monopoly had control over the supply business pretty much nationwide.

The two companies have proposed selling some of their commercial business to a smaller competitor, Essendant, or what’s called “divestiture” in a merger like this.

The attorney for Staples and Office Depot, meanwhile, compared the companies to a couple of penguins on a rapidly-melting iceberg. She argued that the two companies need to team up to keep Amazon at bay, since the Everything Store decided to go after office supply business more aggressively last year.

By Laura Northrup for www.consumerist.com

This week, the speculation about a merger between Office Depot and Staples, two office supply retailers, can all but officially be laid to rest. With hopes for a deal now dead and buried, what does the future hold for Office Depot’s stressed-out and toxic stock?

The intention for the merger was initially announced more than a year ago, on 4 February 2015. Behind the idea was activist-investing hedge fund Starboard Value. Starboard first pushed for a merger between Office Depot and its former competitor Office Max. Once Office Max had been bought out, Starboard then began to push for Stapes to purchase Office Depot.

The deal would have been worth $6-billion. But from the start, Starboard’s efforts have been stymied by regulatory agencies.

Back in December, the Federal Trade Commission (FTC) challenged the merger with violating antitrust laws in an administrative complaint. The case is slated to come before a judge in May of this year, but in the meantime the FTC has sought an injunction to block the merger.

By Kat McKerrow for www.thestreet.com

Staples chief executive says the retailer still hopes to overcome a government lawsuit blocking its takeover of rival Office Depot, even as the company prepares contingency plans to go it alone.

“We’ve been working on Plan B for several months at this point,” CEO Ron Sargent said in a conference call with analysts Friday, though he didn’t say how it might differ from Staples’ existing plan to close stores and expand its customer base. He says the office-supplies retailer is planning specific changes to improve its stand-alone performance “despite the fact that we’re focusing all our energies and efforts on getting this acquisition behind us.”

The assessment came after Staples reported fourth-quarter results that Sargent says fell short of management’s expectations. The company’s retail sales in North America dropped 5%, excluding newly opened and closed stores, as fewer shoppers visited its big-box stores. The chain has more than 1,900 locations around the world.

Sargent says the company has a plan to resume earnings growth this year after core earnings declined in 2015, though executives warned that sales will likely decline again in the current quarter.

Shares of Staples, which slid 2.7% to $9.60 on Friday, have fallen more than 40% over 12 months.

Staples has struggled with years of declining revenue as demand wanes for traditional office basics like folders and filing cabinets and as shoppers seek cheaper deals online. Managers last year pinned their hopes for a turnaround on a $6,3-billion combination with Office Depot designed to save on the operating costs from stores, distribution centres and executive offices. The cash-and-stock deal would be valued at about $5.2 billion at current prices.

The Federal Trade Commission in December sued to block the tie-up, saying it would result in higher prices and fewer options for big companies that buy office supplies in bulk. European officials signed off on the deal last month on the condition that Office Depot sheds its contract supply business and all its Swedish operations.

Staples in February also agreed to sell certain wholesale contracts, representing more than $550-million of annual sales, to Essendant Inc. for about $22,5-million if its Office Depot deal closes. The FTC has rejected Staples’ divestiture proposals.

The FTC in 1997 rejected Staples’ first attempt to buy Office Depot. But in 2013, the agency unconditionally approved Office Depot’s merger with OfficeMax, a move Sargent says should bolster the case for its new deal.

“Since 2013, competition has materially intensified, not lessened,” he says.

Even as it tries to add about 1 700 stores with the merger, Staples has been closing locations. In North America, the company closed 12 stores in the latest quarter, among 73 total closures last year. Staples says it expects to close about 50 North American stores in 2016.

Staples earned $86-million in the holiday quarter compared with a year-earlier loss of $260-million triggered by a write-down of the value of some of its international businesses. Overall revenue slipped 6,9% to $5,27-billion.

By Drew Fitzgerald and Joshua Jamerson for www.wsj.com

Staples and Office Depot have announced the completion of financing arrangements and the extension of their merger agreement from 4 February 2016 to 16 May 2016.
The extension allows for the completion of ongoing federal district court litigation with the Federal Trade Commission.

On 4 February, 2015, Staples and Office Depot entered into a definitive merger agreement to combine as a single company.

The combined company will be better positioned to provide value to customers, and compete against a large and diverse set of competitors. The company expects to deliver more than $1-billion of annualised synergies net of investments to provide increased value to customers by the third full fiscal year post-closing. The combined company will be better equipped to optimise its retail footprint, minimise redundancy, and reduce costs.

In connection with the proposed merger, Staples has filed with the SEC a registration statement on Form S-4 that includes a proxy statement of Office Depot that also constitutes a prospectus of Staples. Staples filed the final proxy statement/prospectus with the SEC on 18 May 2015.

The registration statement was declared effective by the SEC on 15 May 2015.

Office Depot mailed the definitive proxy statement/prospectus to stockholders of Office Depot on or about 19 May 2015, and the stockholders approved the transaction on 19 June 2015.

The registration statement and the proxy statement/prospectus 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 (including all amendments and supplements thereto) carefully.

Source: www.eprretailnews.com

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