It seems like this was a week of big shakeups in the tech space. Add Staples acquiring Office Depot to the list of buyouts and closings for the first quarter of 2015.
Staples will be purchasing all outstanding shares of Office Depot, and in exchange, all shareholders for Office Depot will get $7.25 for each share, in cash. They will also receive 0.2188 of Staples stock, which is quite a strange amount. All in, the acquisition places Office Depot at $6.3 billion in valuation. Staples and Office Depot started to discuss the deal back in September and the terms were unanimously passed in a vote by the Board of Directors for both companies.
Ron Sargent, CEO of Staples said that this move would allow Staples to serve its customers better.
This is a transformational acquisition which enables Staples to provide more value to customers. We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies.
Buzzwords aside, if joining forces would effectively save $1 billion annually, I'm shocked it took this long for the deal to go down. Between employee reduction on the administration end, distribution reduction and cuts in the size of the total retail space, Staples might positively refocus itself by taking a long hard look at its own costs.
Office Depot's CEO Roland Smith added that after adding OfficeMax to the Office Depot portfolio over the past year, this acquisition made a lot of sense "over the long term." He closed his statement by saying that, Office Depot "look(s) forward to bringing our experience and knowledge to the new organization."
For the Board of Directors, Staples will approve adding two more members to its Board, increasing the size to 13. Sargent will continue running Staples as CEO and the corporate HQ will stay in its home in Framingham, MA. The transaction should clear by the end of 2015 pending shareholder and any SEC clearance.