American leading office superstore chain Staples Inc. (NASDAQ: SPLS) said it agreed to be acquired by New York-based private equity firm Sycamore Partners for $6.9 billion. Under the deal, Staples stockholders will receive $10.25 per share in cash.
Sycamore specializes in consumer and retail investments. The firm has more than $3.5 billion in capital under management. The firm’s investment portfolio includes Belk, Coldwater Creek, EMP Merchandising, Hot Topic, MGF Sourcing, NBG Home, Nine West Holdings, Talbots, The Limited and Torrid.
Headquartered outside of Boston, Mass., Staples operates more than 1,550 stores primarily in North America. The company sells supplies which include staples, office machines, promotional products, technology, and business services both in stores and online. The company was co-founded by Leo Kahn and Thomas G. Stemberg, who were former rivals in the New England retail supermarket industry. Staples opened its first store in the Brighton neighborhood of Boston in 1986.
Staples was launched with backing from private equity firms including Bain Capital. Bain co-founder Mitt Romney served on the company’s board of directors for the next 15 years, helping shape their business model.
Last year, the FTC denied the merger of Office Depot and Staples, sending the share price of both companies tumbling.
“Today’s announcement is the result of a comprehensive process in which our Board, with the assistance of a transaction committee comprised of independent directors, and outside financial advisors, explored and considered various alternatives to enhance value for our stockholders,” said Staples Chairman Robert Sulentic. “Staples’ Board believes that this process has led to a transaction which is in the best interests of our stockholders, as well as Staples and its employees.”
The deal is subject to customary closing conditions, including regulatory and stockholder approval, and is expected to close no later than December, 2017. The closing is not subject to a financing condition.
“With an iconic brand, a winning strategy, and dedicated and passionate associates who are deeply focused on the customer, Staples is truly an outstanding enterprise,” said Stefan Kaluzny, Managing Director of Sycamore Partners. “We have tremendous confidence in CEO Shira Goodman and great respect for the Staples management team and are excited about this opportunity to partner with them to accelerate long-term profitability.”
“The Sycamore Partners’ team shares Staples’ entrepreneurial spirit and long-term vision,” said Shira Goodman, Staples Chief Executive Officer and President. “This transaction will enable us to drive greater value for our customers and immense opportunity for our business.”
The acquisition price represents a premium of 20 percent to the 10-day volume weighted average stock price for Staples shares for the period ended April 3, 2017, the last trading day prior to widespread media speculation about a potential transaction.
Staples’ Board of Directors has unanimously approved the deal and recommended that all Staples stockholders vote in favor of the transaction.
Barclays and Morgan Stanley & Co. LLC are acting as financial advisors and Wilmer Hale LLP is acting as legal advisor to Staples.
UBS Investment Bank, BofA Merrill Lynch, Deutsche Bank, Credit Suisse, Royal Bank of Canada, Jefferies, Wells Fargo Bank, National Association and Fifth Third Bank are providing debt financing for the transaction. BofA Merrill Lynch and Deutsche Bank Securities Inc. are acting as financial advisors and Kirkland & Ellis LLP is acting as legal advisor to Sycamore Partners.