Staples Offers To Buy Office Depot For $2.1 Billion (cnn.com) 56
For the third time, Staples is proposing to buy rival Office Depot in a $2.1 billion deal. CNN reports: The $40-per-share offer price for Office Depot's parent company, ODP Corp., is a roughly 60% premium over its average closing price for the last 90 trading days. The all-cash transaction, according to Staples, is a "compelling value proposition" and is a "superior to the intrinsic, standalone value" of Office Depot. Staples said it's "prepared to take all necessary measures" to get the merger approved by the Federal Trade Commission, which said in 2015 that the combination would give the combined companies too large a chunk of the office supply retail market and would violate antitrust law.
To avoid antitrust scrutiny, Staples proposed selling its IT management company CompuCom or its business-to-business unit. Doing that might lead to Staples increase its proposal price, it said. The regulatory process could take about six months, the company estimated, and Staples is urging ODP's board to "instruct management to cooperate with the regulatory authorities as soon as possible." Monday's proposal is about a third of the purchase price of the original 2015 purchase agreement of $6.3 billion. This marks the third time in about 25 years that the companies have tried to merge, including once in 1997.
To avoid antitrust scrutiny, Staples proposed selling its IT management company CompuCom or its business-to-business unit. Doing that might lead to Staples increase its proposal price, it said. The regulatory process could take about six months, the company estimated, and Staples is urging ODP's board to "instruct management to cooperate with the regulatory authorities as soon as possible." Monday's proposal is about a third of the purchase price of the original 2015 purchase agreement of $6.3 billion. This marks the third time in about 25 years that the companies have tried to merge, including once in 1997.
Something ain't right (Score:2)
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I read it as the merged company making a promise to sell CompuCom once the merger closes as a condition of antitrust approval of the merger.
Consolidation (Score:4, Informative)
In all seriousness, that would make them a monopoly, as Staples already owns Quill.com. If you want competition for office supplies, you will have to purchase them from someplace that doesn't specialize, like Walmart or Amazon.
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In all seriousness, that would make them a monopoly
If you consider the important market segment to be "office supply stores that you can drive to and only sell office supplies", then they are close to a monopoly.
If you are one of the 99.99% of potential customers that don't really care if Walmart sells other stuff too, then they are not a monopoly.
If you buy your office supplies online, then they are not only not a monopoly, but not even the market leader.
I haven't bought anything from either Staples or Office Depot in years.
There's a ton of stuff Walmart doesn't carry (Score:2)
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I haven't bought anything from either Staples or Office Depot in years.
Fair point, but I think the "monopoly" position is far more obvious in business contracts, not personal purchases.
In fact, I'd be curious as to what percentage of their revenue, is driven by individuals and not corporations.
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The moon is made of green cheese
Aliens built the pyramids
George Washington cut down a cherry tree.
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Actually the post has some good points. The issue is that you couldn't still the facts.
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Crap...this the submit button too fast. Meant to say "...you can't distill the facts from the words.".
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Holy crap....I am done posting for the day. Let me try this again....
Crap, I hit the Submit button too fast. Meant to say "...you can't distill the facts from the words.".
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Staples and Office Depot cater to non-online sales for business supplies, which is a diminishing sector. Most businesses already buy office supplies online - few offices send someone to go to Staples or Office Depot to go buy staples, pens or office chairs or paper. Instead, they just
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My wife already calls it "Home OfficeMax Depot".
Darn. Your wife beat me to it. I was going to try to make a poor joke that, because of COVID, the name "Office Depot" is totally out. Nobody works in an office anymore . . . everyone works in a "Home Office".
So the name "Home Office Depot" would fit better in the Zeitgeist.
But then again, with a lot of us being under lock-down right now . . . who is going to a depot, with a huge stock of potential virus spreaders . . . ?
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New slogan: "The Only Button"
(Reposted from the last time they tried this.)
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They may monopolize the Retail store market. However that still has a lot of competition. Online Amazon and other places like W.B. Mason that will deliver to offices. As well Walmart and target. Which all sell a lot of the same stuff.
There are also a lot of pressures on such places, besides just competition.
Being that we can do most of our work on a Computer (normally supplied by our work) A lot of these office supplies that fill up these stores, are becoming less and less needed. I still have a box of
Only $2B? (Score:2)
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The value of a company is the perceived current value of its future profits.
Retail is a high-competition and low-margin business. So a company with a big footprint and large turnover still isn't worth much.
Apple controls intellectual property that gives it a monopoly on its products, which are sold at a premium due to prestige/fashion,
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Margins on office equipment isn't that high probably. Also, how often do you see a bunch of people at Office Depot? Never. Does Office Depot have delivery of bulk office supplies to actual offices? Look at their revenue vs operating income, https://en.wikipedia.org/wiki/... [wikipedia.org] , awful. 38,000 employees for 181 million in profit? Off 10 billion in revenue? Pretty crappy if you ask me. Then look at Netflix 20 billion revenue and 1.8 billion profit. Then the asking price is probably related to 10 year forecasted
Three customers in $12 million real estate (Score:3)
Those big stores are expensive too.
Let's say 20,000 SQ feet @ $5 foot = $100,000 month. ...
Gotta sell a lot of Post It notes to make rent, plus you have employee payroll, inventory
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If you want to see sticker shock in reverse, just take a look at IBM. 20 years ago, it was still considered a computing behemoth, 10 years ago, its still had the 4th highest market cap in the tech sector. Today, its non-existent in the computer industry, and Red Hat probably still produces a large share of its operating revenue.
Store competition is good (Score:2)
Wasn't this idea blocked roughly 10 years ago for anti-trust reasons? Although the internet reduced the need for such stores, monopolies are still not a good thing.
there where 3 stores back then (Score:2)
there where 3 stores back then
Re:Store competition is good (Score:4, Interesting)
If they don't merge, Office Depot is likely to fold within a decade.
The market demand for a B&M specialty store isn't enough to support both.
So are we better off with a single strong local chain to compete with Amazon and Walmart, or one gone and the other weak?
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I'm not sure about solid data, but anecdotally it checks out.
We went from 5 to 2 stores in my area, also, the 3 that closed were all the non Staples stores.
Locally at least, Staples already holds the monopoly on retail office supplies, but it matters not since most small businesses use WB Mason (can't speak to larger ones), and people use the internet for most things. The impact of Staples doubling its price would be minimal, and the loss of 60% of the stores seems to imply a collapse of the market as a who
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Is there solid data for that claim?
Office Depot has been closing stores. The local one here closed about a month ago.
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Looking at Office Depot's quarterly and annual results [theodpcorp.com], they seem to be doing okay. Staples is private so they don't report quarterly and annual financial results anymore so no comparison can be made between the two.
Office Depot is still doing billions in annual sales
2016 = $11,021 million
2017 = $10,240 million
2018 = $11,015 million
2019 = $10,647 million
2020 YTD 9 (only 3 quarters) = $7,422 million
and are profitable
2016 Adjusted Net Income = $251 million
2017 = $241 million
2018 = $199 million
2019 = $228 mil
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Professionals actually have a use for all those different supplies, that's why they have a whole big box store full of all the different supplies that people need in an office, and Wally World or wherever only has a few.
And Amazon, who knows what you get; a lot of supplies, people need more of the same, correct version they got last time; not whever random bullshit China wants to send with the same UPC next time, like you get online.
Sirius XM (Score:3)
When Internet radio became viable, regulators allowed Sirus and XM radios to merge. They are now the only satellite radio in town, however it does not make them an effective monopoly. Effective is the keyword here, they still need to compete for ears, and frankly I had not renewed our service with them in years.
Same with brick and mortar office stores. With Amazon, for physical items, and laptops/tablets/kindle replacing paper, the entire category of stores might no longer be competitive on their own. And, there are still Fedex office stores, and CVS selling all kinds of school items; so even in the brick and mortar space they will still have some competition.
Frankly, the time might be right to allow them to merge. If you asked 3-5 years ago, I would have a different answer.
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To add to your radio point, I know 2 people that subscribe to satellite radio, both use it internet only.
Slow News Day? (Score:2)
Or maybe put another way, is this more “slashdot newsworthy” than everything else going on?
I really don’t mean to be rude and I’m very conscious that this post could mistakenly be taken that way... But somehow I suspect that I’m not the only one wishing for a slightly more discerning story filter...
Expand anti-trust to unions (Score:2)
Labor unions exist for the sole purpose of maintaining — and raising — the price, of what their members are selling: their labor...
If one retail chain can be prevented from buying another — for fear, there will not be enough competition in the market of office supplies, why do we not only allow, but encourage monopoly-control of markets of the (far more crucial, presumably) education, transportation, law-enforcement, construction, and healthcare labor?
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We should look to history... In the United States, labor unions [wikipedia.org] emerged in the mid-nineteenth century, where they took up the tasks of activities such as the collective bargaining of wages, benefits and working conditions.
It is no coincidence that at the same time, the United States introduced the term "Robber Baron [wikipedia.org]", originally in reference to Cornelius Vanderbilt, who, with others, became so notor
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Everything I said remains true, whether you classify it as "demonizing" or not.
Completely irrelevant.
Point remains: if it is wrong for some to enter into agreements to maintain/raise prices of their offerings — be it labor or printer refills — it ought to be just as wrong for all.
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Let's consider how your solution would work during a period of inflation. Household expenses climb. Gas and other energy prices climb. The cost of raw materials climb. All of this places an increasing burden upon the lowest paid in society - the people who have the smallest amount of disposable income [if any] to ride out the peaks and troughs of the prices-vs-income balancing act.
You s
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I really don't care for economist's hand-waving.
My point is fairness — and human rights. If we're prohibiting something to some, we ought to prohibit same to all. And if it, whatever it is — from speeding, to saying "negro", to rioting, to price-fixing — is Ok for some, then it shall be Ok for all.
Only in Canada, you say? (Score:2)
The Office Max/Office Depot merger was a disaster (Score:2)
The Office Max/Office Depot merger was a disaster.
Why repeat a bad decision?
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That's because Depot's management is incompetent and the two companies basically operate completely separate. In this new case, Staples would take the reigns.
Amazon their biggest competitor (Score:2)
Ages ago, Staples, Office Depot, and Office Max were the three corners of retail office supplies. Then the two "Offices" merged, and online retail took over. I'm happy for all the brick and mortars to conglomerate just to provide competition, although in my metro we can get popular ink jet cartridges delivered in 2 hours. Frankly, I keep hoping Walmart or Target will give Amazon some heat, but now I think even they are too late.
wow (Score:1)
WHY ? (Score:1)
Not Another Monopoly Please (Score:2)
When will we learn? I'm all for a free market, but when you've bought up all the competition, that's no longer the case. Monopolistic behavior must be prevented. When there's no competition it's bad for us all.
That will cost a lot of jobs (Score:2)
Others have pointed out that OfficeMax/OfficeDepot is not in great shape financially, but I would hope they
Anti-competitive on multuple markets (Score:2)
It wasn't that long ago that some markets had many choices for people who wanted to purchase a PC or printer. My market at one point had CompUSA, Computer City, Circuit
How would selling those avoid anti-trust issues? (Score:2)
No. Please don't do it. (Score:2)
Hopefully, this will NOT happen (Score:2)
It is time to STOP ALLOWING MONOPOLIES. These are disaster in capitalism. Without competition, we might just as well be China. In fact, at this time, even China has more competition.
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Except other places sell office supplies, Amazon is doing billions of dollars of it too.
Shouldn't everybody be against this? (Score:2)
I mean, don't you believe in actual competition? Don't you all hate one government, I mean, one company with 90% of the market?
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there are other huge office supply vendors. Amazon has $3 billion in office revenue. there is no monopoly.
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And when Amazon buys them?
Give me a break - competition is something you on the right (or rather, the wrong) hate.