Office Depot Alleged To Re-Enter Talks For Staples Stores

Office Depot Inc ODP popped as much as 23 percent Monday on a report that the firm has held talks to acquire 1,500 stores from rival Staples, Inc. SPLS.

While alleged by New York Post sources, the rumor’s veracity is corroborated by two factors: a willingness to dump brick-and-mortar business by Staples’ new owner, and Office Depot’s previous interest.

A public filing in late July noted that a bidder called “Party A,” now revealed by the Post to be Office Depot, bid between $625 million and $700 million in June for Staples’ North American locations.

Staples instead sold itself to Sycamore Partners, a private equity firm, which soon outlined a plan in which it would split Staples into three separately financed segments: U.S. retail, Canadian retail and corporate supply.

If Sycamore devalues the brick-and-mortar chains, as the Post suggested, and instead looks to capitalize on Staples’ corporate services, it may opt to jettison the physical stores.

Consideration doesn’t guarantee a deal, though.

The Federal Trade Commission blocked previously pursued Staples-Office Depot deals in 1997 and 2015 on antitrust concerns, as the merger would establish the United States’ only office-supply chain.

At time of publication, Office Depot was trading up 1.22 percent and Staples flat on the day.

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