Look out, David: There's set to be an office-supply Goliath. Staples is buying Office Depot in a cash-and-stock deal valued at some $6 billion. The two have a combined 4,000 stores and do about $35 billion in sales each year. Office Depot Inc. shareholders will receive $7.25 in cash and 0.2188 of a share in Staples Inc. at closing. The deal values Office Depot at $11 per share, and the companies put the transaction's value at $6.3 billion. The deal is expected to close by year's end.
Activist investor Starboard Value LP last month championed the merger in a letter to Staples CEO Ronald Sargent, asserting that marrying the two could more than double the combined operating profit; Starboard owns roughly 10% of Office Depot and 6% of Staples. In a look at the potential deal yesterday, the Wall Street Journal pointed out that the same proposed merger was scuttled by antitrust regulators in 1997; the combination is expected to get a similarly tough review this time around. But some analysts see the world of 2015 as significantly different, with the office-supply landscape experiencing competition from the likes of Target, Walmart, and Amazon. (Read more Staples stories.)