US office supply chain Staples has offered to buy rival Office Depot for $2.1bn, more than four years after a federal judge blocked its first attempt on the grounds it would reduce competition.
The office supplier, which is owned by private equity firm Sycamore Partners, said it would pay $40 per share in cash for its longstanding competitor. The offer represents a more than 60 per cent premium to the average closing share price for Office Depot over the past 90 days, the group said in a statement on Monday.
Shares in Office Depot were up 12 per cent in early trading.
The deal may become a test case for whether US antitrust regulators believe the meteoric rise of ecommerce giant Amazon has been sufficiently game-changing for the retail industry for them to now permit the merger of America’s two largest brick and mortar stationery retailers.
The Federal Trade Commission ruled four years ago that the merger of Staples and Office Depot, which was then worth about $6.3bn, would hurt corporate customers who would have had fewer options from where to buy office supplies.
The grip that Staples and Office Depot have had on the market has been challenged in recent years both by Amazon’s growing corporate customer base and big discount chains such as Walmart.
The decision over whether to approve any deal could also be an important test for the incoming Biden administration. Democratic presidents have historically pushed for tougher antitrust enforcement, however the increasing heft of Amazon has caused growing concern.
In a statement, Staples added that it could lift its valuation of Office Depot if its competitor agreed to sell some of its assets, including CompuCom, the business it acquired in late 2017 for $1bn.