Staples’ future under private equity ownership is all about online growth.
Having disposed of its international operations (including those in Australia and New Zealand) Staples has sold off the rest of ‘farm’ to a private equity group.
Sycamore Partners, a US private equity firm that specialises in retail, will pay US$6.9 billion for Staples, a company that has seen its sales, profits and store numbers decline in the wake of the online shopping phenomena, driven by the likes of Amazon.
Staples had sought to remain competitive in the online world by merging with Office Depot but the deal was blocked by US regulators last year and the companies abandoned the plan.
In its latest annual report, Staples was up front about the challenges it faced, stating it faced strong competition from wholesalers and local stationery stores.
“We also compete with online retailers such as Amazon.com, mass merchants such as Walmart and Target, warehouse clubs such as Costco, computer and electronics retail stores such as Best Buy,” the company said.
According to a report in the New York Times, Staples’s board and management decided to sell the company after shareholders had essentially lost faith in the business. Shares of the company were trading near US$7 earlier this year, having fallen sharply from about US$18 a share just two and a half years ago.
Sycamore’s offer of US$10.25 a share represents a 20% premium over the company’s stock price in early April, before initial reports of a deal to sell the company lifted shares.
Staples still sells huge volumes of paper, printer cartridges with a minority of its goods sold at bricks-and-mortar locations.
Around US$10.6 billion of its sales are delivered, compared with about US$6.6 billion sold in stores.
Source: Stationery News