FRAMINGHAM, Mass.--(BUSINESS WIRE)--Staples, Inc. (Nasdaq: SPLS) today announced that on May 16, 2016, the company and Office Depot, Inc. plan to terminate their merger agreement following U.S. District Court for the District of Columbia’s recent ruling granting the Federal Trade Commission’s request for a preliminary injunction to block the acquisition. Under the terms of the merger agreement, Staples will pay Office Depot a $250 million break-up fee. 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.”
The company announced a strategic plan to enhance long-term value including the following actions:
Winning in the Mid-Market with Products and Services
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.
Reshaping Staples to Reduce Risk and Preserve Profitability
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.
Reducing Costs to Drive Efficiency and Fund Growth Investments
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.
Continuing to Return Cash to Shareholders
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.
Staples Q1 2016 Earnings Call
Staples, Inc. will hold its
quarterly conference call to discuss first quarter 2016 results and its
strategic plan on Wednesday, May 18, 2016 at 8:00 a.m. Eastern Time. To
listen to the conference call via webcast, please visit Staples’
Investor Relations website at http://investor.staples.com.
About Staples, Inc.
Staples retail stores and staples.com
help small business customers make more happen by providing a broad
assortment of products, expanded business services and easy ways to
shop, all backed with a lowest price guarantee. Staples offers
businesses the convenience to shop and buy how and when they want - in
store, online, via mobile or though social apps. Staples.com customers
can either buy online and pick-up in store or ship for free from
staples.com with Staples Rewards minimum purchase. Expanded services
also make it easy for businesses to succeed with in-store Business
Centers featuring shipping services and products, copying, scanning,
faxing and computer work stations, Tech Services, full-service Print &
Marketing Services, Staples Merchant Services, small business lending
and credit services.
Staples Business Advantage, the business-to-business division of Staples, Inc., helps mid-market, commercial and enterprise-sized customers make more happen by offering a curated assortment of products and services combined with deep expertise, best-in-class customer service, competitive pricing and state-of-the-art ecommerce site. Staples Business Advantage is the one-source solution for all things businesses need to succeed, including office supplies, facilities cleaning and maintenance, breakroom snacks and beverages, technology, furniture, interior design and Print & Marketing Services. Headquartered outside of Boston, Staples, Inc. operates throughout North and South America, Europe, Asia, Australia and New Zealand. More information about Staples (NASDAQ: SPLS) is available at www.staples.com.
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not all forward-looking statements include such words. Forward-looking
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and projections which involve substantial uncertainty and risk,
including the review of our assessments by our outside auditor and
changes in management’s assumptions and projections. Actual results or
events may differ materially from those indicated by such
forward-looking statements as a result of risks, uncertainties and other
important factors, including but not limited to factors discussed or
referenced in our annual report on Form 10-K filed on March 4, 2016 with
the SEC, under the heading “Risk Factors” and elsewhere, and any
subsequent periodic or current reports filed by us with the SEC. In
addition, any forward-looking statements represent our estimates only as
of the date such statements are made (unless another date is indicated)
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