US: Staples, Office Depot to divest operations as they seek merger approval

Staples and Office Depot, the number one and two largest office supply retailers in the nation, have agreed to sell corporate contracts that generate about $550 million in sales as they await approval of a proposed merger of the two retailers.

Essendant, Inc. of Deerfield, Ill., will pay the Framingham retailer about $22.5 million for the business, if the merger with Office Depot is completed.

Regulators have been concerned about corporate contract business; together, Staples and Office Depot control 70 percent of the US market for business customers.

In December, the FTC took legal action to kill the deal, saying a merger would “eliminate beneficial competition” that helps keep the cost of office supplies low. Staples said it would fight the commission in court, and proceedings are expected to begin in mid-to-late March.

“We’re pleased to reach this agreement with Essendant as we continue to work to complete the acquisition of Office Depot,” Staples chief executive Ron Sargent said in a statement, “Our agreement with Essendant strengthens a national competitor.”

Staples and Office Depot last received European approval for its merger after the companies agreed to divest some of its operations there. Regulators in China, New Zealand, and Australia have also approved the merger.

Full content: Bloomberg

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