Staples exits merger with Office Depot, will pay $250 million
Article continues below
Staples plans to explore strategic alternatives for its European operations.
Staples also plans to terminate its agreement to sell more than $550 million in large corporate contract business and related assets to Essendant in connection with the termination of the Office Depot merger agreement.
"We are extremely disappointed that the FTC’s request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case," said Ron Sargent, Staples’ chairman and chief executive officer.
"We believe that it is in the best interest of our shareholders, customers, and associates to forego appealing this decision, terminate the merger agreement, and move on with our strategic plan to drive shareholder value.
"We are positioning Staples for the future by reshaping our business, while increasing our focus on mid-market customers in North America and categories beyond office supplies."
Staples announced a strategic plan to enhance long-term value. Staples is building on its success serving the needs of mid-market business customers with 10 – 200 employees.
The company is focused on increasing its share of wallet with existing customers and acquiring new customers. The company is increasing its offering of products and services beyond office supplies. Staples also plans to pursue market share gains in core categories like office supplies, ink, toner and paper.
To support its growth plans, the company will invest in lower prices and improved supply chain capabilities and add more than 1,000 associates to its mid-market sales force.
The company will simplify the customer experience with its world-class digital selling tools and capabilities. Staples will also pursue acquisitions of business-to-business service providers and companies specializing in categories beyond office supplies to build scale and credibility and accelerate growth in these areas.
Staples plans to explore strategic alternatives for its European operations. This will allow the company to sharpen its focus and more aggressively pursue its mid-market growth strategy in North America. Staples has closed more than 300 of its stores in North America since 2011.
The company remains committed to increasing productivity and preserving profitability in its North American retail stores by increasing customer conversion, increasing the mix of services, reducing fixed costs, and closing underperforming stores. The company plans to close at least 50 stores in North America in 2016.
The company generated approximately $750 million of annualized pre-tax cost savings from 2013-2015 by evolving business processes, increasing productivity, and developing more efficient ways to serve customers.
Staples is initiating a new multi-year cost savings plan which is expected to generate approximately $300 million of annualized pre-tax cost savings by the end of 2018.
The company will primarily focus on reducing product costs, optimizing promotions, increasing the mix of Staples Brand products, and reducing operating expenses.
Staples will continue to return excess cash to shareholders. The company remains committed to its dividend program.
Staples plans to resume repurchasing its common stock through open-market purchases during the second quarter of 2016. The company expects share repurchases of approximately $100 million in 2016. ■