And then there was one ... office supply chain. Staples and Office Depot announced today that the companies have entered into an agreement for Staples to acquire its smaller rival for $11 per share. Speculation that the deal would take place has run rampant since it became public in December that Starboard Value had accumulated six percent of Staples' stock as well as a 10 percent stake in Office Depot.
Starboard Value's CEO Jeff Smith, labeled "the investor CEOs fear most" by Fortune, was reported to be pushing the companies to merge. Neither Mr. Smith nor the boards of Staples and Office Depot seem concerned about the inevitable anti-trust considerations raised by a merger of the two top players in a retail vertical.
"This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment," said Ron Sargent, Staples' chairman and chief executive officer, in a statement. "We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies."
Both Staples and Office Depot have continued to look for ways to remain competitive, not only in their own head-to-head competition, but also in the face of a growing list of rivals, from Amazon.com to Walmart.
Office Depot CEO Roland Smith, who in November called the first year transition after the merger with OfficeMax "a huge success," finds himself in the position of being the acquired rather than the acquirer this time around.
"This transaction delivers great value for our shareholders and creates a company ideally positioned to serve our customers and grow over the long term," said Mr. Smith. "It is also an endorsement of our many accomplishments and the tremendous success we've had integrating Office Depot and OfficeMax over the past year. We look forward to bringing our experience and knowledge to the new organization."