Is Staples Office Depot Merger More Likely Following EU Ruling?

The European Commission has approved the £6.3 billion Staples Office Depot merger. The decision comes after the two companies agreed to sell some of Office Depot’s operations to relieve monopoly concerns. Shares of Staples and Office Depot rose sharply following the announcement on 10th February.

Office Depot will sell its entire business in Sweden and its contract distribution business in the EU and also in Switzerland.

“The substantial remedies package offered will ensure that effective competition is maintained, in particular on the EU’s international office supplies market,” Margrethe Vestager, commissioner in charge of European competition policy explained. “This will allow European companies to continue to benefit from the single market by procuring their office supplies internationally and to reduce costs.”

Doubts Remain in US Regarding Approval For The Staples Office Depot Merger

Staples merger

Will the EU decision have any impact on the FTC’s administrative trial set for May 2016?

The proposed Staples Office Depot merger has now met with approval in Australia, New Zealand, China and Europe. It is still awaiting approval in Canada and from the Federal Trade Commission (FTC) in the US. Doubts still remain whether the FTC will allow the deal to go through with the administrative trial set to commence on 10th May 2016.

Speaking following the EU Commission’s decision, Ronald L Sargent, Staples Chairman and Chief Executive said:

“This is a significant step, and we’re very pleased that the European Commission has approved this transaction. We look forward to a full, impartial judicial review in the United States.”

In December 2015 the FTC rejected Staples offer to sell $1.25 billion in contracts in a bid to win approval for the merger. Staples and Office Depot argue that the FTC’s fears of a lack of competition are unfounded in light of giant online operators including entering the office supplies market.

Staples state that it is still open to negotiations with the FTC to ensure that the merger goes ahead and that it may pursue legal action.

Breaking News: Essendant Agrees To Buy Staples’ Contracts

This week, Essendant has confirmed that it will acquire Staples’ contracts worth $550 million if the Staples Office Depot merger goes through. 25% of annual sales from the contracts divested to Essendant will come from Fortune 100 accounts and half the revenue will come from Fortune 500 companies.

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Sam Rose