The US Federal Trade Commission (FTC) is split over whether to approve the Staples acquisition of Office Depot, according to the New York Post.
In a 29 November article, the Post said that two of the four FTC commissioners are still opposed to the deal. That is not good news for the two resellers just over a week before the FTC’s 8 December deadline to conclude its investigation.
Of course, that deadline could be extended if the FTC and Staples feel there is a chance of reaching a compromise agreement without the need for litigation. But – as we said on 20 November – that would probably mean Staples having to divest more assets than suggested in the possible solution that involved some third-party contracts being fulfilled by Essendant.
It is all very well farming out some of these contracts, but what the FTC commissioners will be looking for is a remedy that creates a viable – and sustainable – alternative in the corporate contract space.
Names we have thrown into ring over the past few months include WB Mason, HiTouch Business Services, Grainger and even Lyreco. You could still imagine a scenario involving one of these (or Mason and Lyreco in some kind of partnership).
Then then big question is what is the cut-off point at which Staples will walk away? It can pull out if required to divest $1,25-billion or more of Depot’s North American sales, but that is still a low figure compared to combined contract sales of around $12-billion.
If Staples is required to divest a major part of Depot’s US contract business (Canada is still going through its own antitrust investigation, by the way), would it be satisfied with simply acquiring the online and retail sides. I have my doubts about that …
By Andy Braithwaite for OPI