Sycamore Partners to acquire office supplies company Staples
30 June 2017
Office supplies company Staples has agreed to sell itself to a private equity firm.
According to commentators, the deal was the latest instance of a once-prominent name fall by the wayside as the powerful forces reshaped how people shopped.
Sycamore Partners, a private equity firm focused on retailers, which already owns the likes of Talbots, the Limited and Hot Topic, said on Wednesday that it would acquire Staples for $6.9 billion, citing its ''iconic brand.''
Sycamore will be acquiring a company that is in steady decline, with sales and gross profits falling for each of the last four full years. Also, at the same time, the company had been shrinking the number of stores it operated.
Staples had sought to merge with another chain, Office Depot, to remain competitive, but the deal was blocked by a federal judge, and the companies abandoned their effort last year.
In its most recent annual report, Staples set out the challenges it faced, in addition to those from wholesalers and local stationary stores:
''We also compete with online retailers such as Amazon.com, mass merchants such as Walmart and Target, warehouse clubs such as Costco, computer and electronics retail stores such as Best Buy.''
According to commentators, Sycamore's deal for Staples, which Reuters was first to report, illustrated that some buyout firms were distinguishing between mall-based fashion retailers, that are vulnerable to changing consumer tastes, from retailers with a niche and rich cash flow, such as Staples.
The acquisition also showed that Sycamore was willing to take on the risk of falling store sales at Staples because of the potential it saw in Staples' delivery unit, which supplied businesses directly.
Sycamore is offering $10.25 per share in cash for Staples. Trading in the shares ended at $9.93 on Wednesday after Reuters reported the exact deal price. According to Staples, the deal was expected to close by December.