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