B Riley & Co Analyst Scott Tilghman told Benzinga that the office supply sector is facing structural headwinds.
“It’s very clear that you have declining consumption in paper, ink and toner -- the core categories in the mix,” he said.
That’s why Tilghman thinks that any sort of combination between Office Depot Inc ODP and Staples, Inc. SPLS would be more of a merger than an acquisition, because no company in the sector would want to issues debt to make an acquisition at a premium.
“It would provide an even greater boost to the potential synergy number than if you have Staples say ‘We’re just going to issue $5 billion worth of debt and buy this company outright,’” Tilghman said.
In addition, Tilghman said that given the work Office Depot CEO Roland Smith and his team have done with the company, Tilghman explained that there’s a good chance they will be very actively involved in the combination if the two companies were to get together.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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