Government Strikes Another Blow To Staples-Office Depot Merger
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It looks like Uncle Sam still isn't ready for a world with a single brick-and-mortar office supply chain.
The FTC rejected Staples’ proposal Monday to buy out smaller rival Office Depot, the company said in a statement—despite its offering to divest $1.25B in contracts to appease the regulator.
“Staples and Office Depot have not shown the FTC that by divesting commercial contracts, it would create a meaningful competitor to their combined company,” Andrea Murino, co-chair of law firm Goodwin Procter’s antitrust practice, told The Street.
There’s still hope for the deal, though. If Staples and Office Depot can make a few more sacrifices—or come up with a more compelling case for a merger—they could possibly sway the judge when the case goes to trial May 10.
Wall Street remains skeptical the deal will pass; since it was announced, Staples shares have dipped 45%. Not to mention, a final collapse of the deal would trigger a $250M breakup fee for Staples—a probability that caused Office Depot shares to jump by 1.7% Monday.
The merger is a huge part of the Staples' efforts to combat the growing threat of e-commerce as well as increased pressure from Walmart and Target, the report said. [Street]