Staples buys Office Depot for $6 billion
NEW YORK (CNNMoney) — There’s about to be one game in town when it comes to office supplies.
Staples announced Wednesday it intends to buy rival Office Depot in a $6.3 billion deal, betting that the key to higher profits is operating on an even larger scale.
That’s the same calculation Office Depot made not long ago, when it bought OfficeMax.
In this digital age, people just aren’t buying pens and pencils like they used to, and Staples is feeling the pressure from all sides, including giants WalMart and Amazon. That’s why Staples last year announced plans to close 12% of its stores.
The struggling office supply retailer said the merger will mean cost savings of about $1 billion per year.
The purchase announced Wednesday would unite the three brands, but it still must be approved by regulators.
They scuttled a previous merger attempt between Staples and Office Depot in 1996, but approved the Office Depot and OfficeMax deal.
Staples said the talks that produced this deal began in September.
A deal was pushed by Starboard Value, an activist investor that owns a stake in both companies. Earlier in the week, investors cheered rumors that a deal was close. In premarket trading on Wednesday, Staples slipped about 2% while Office Depot climbed over 6%.
Office Depot operates an Office Max store in Brookfield. Staples operates more than 30 stores in Connecticut.