When phrases like “high-powered deals” and “corporate espionage” come up, it’s usually not in reference to an industry where manila folders and ballpoint pens are bestsellers. However, soon-to-be-merged Staples and Office Depot are making some hard choices about their intertwined futures.
The Wall Street Journal reported that, despite signing a deal to merge with a deadline of Feb. 4, Staples and Office Depot finalized another agreement to push that transition date back three months to May 16. Why the moratorium less than three weeks before it was set to kick in? The two office supply retailers are currently fighting a lawsuit from the Federal Trade Commission, filed for the specific aim of blocking the merger. Staples and Office Depot need more time to fight it.
“This merger creates an unparalleled opportunity to better serve our customers and to deliver shareholder value,” Ron Sargent, CEO at Staples, said in a statement on the merger extension. “We are committed to completing this transaction and look forward to a full and impartial judicial review.”
Staples and Office Depot’s day in court will come in March, but until then, the two companies, as well as the resultant conglomerate, have to deal with the fallout from the delayed merger and litigation. As of Wednesday (Jan. 20), Staples’ shares sat at just $8.80, down a penny from opening. However, Office Depot is even further down the ranks at just $5.09 per share.
USA Today explained that Staples and Office Depot have at the very least attempted to get out of this hole and assuage the FTC at the same time, as they offered in December to sell a combined $1.25 billion in supply contracts to minimize risk of a monopoly. The deal fizzled, and both companies had no choice but to put the skids on the planned merger and hope that after the trial adjourns, their plans will still be in place.