UPDATE: January 12, 2021: Office Depot on Monday acknowledged that it had received Staples' offer and said its board is "carefully reviewing" it with the help of legal and financial experts. The board is scrutinizing the proposal for "potential antitrust and other regulatory challenges" in light of Staples' ownership structure and the "past regulatory decisions blocking the combination of the two companies," as it also considers the purchase price and other items, according to a company press release.
Staples on Monday said it sent a letter to Office Depot's board of directors with a bid to take over its office supplies rival for $40 per share or $2.1 billion. Plans for Staples to acquire the company for triple that were thwarted by antitrust concerns in 2016.
Staples' intention is to buy all of Office Depot's common stock in March if it doesn't reach a negotiated agreement, according to a press release from USR Parent, which is in effect Staples' parent entity, (although private equity firm Sycamore Partners has owned Staples since 2017).
To avoid any antitrust snag this time, Staples is prepared to divest Office Depot's business-to-business operations "to a FTC approved and qualified buyer," per the release. Sycamore acquired Staples for $6.9 billion in 2017.
The momentum toward getting these two office supplies companies together is ongoing, but that doesn't mean it's going anywhere. A month after buying Staples in 2017, for example, Sycamore was said to be mulling a sale of the retail business to Office Depot.
The Federal Trade Commission also moved against a proposed merger between the two in 1997.
In the years since their merger hopes were dashed for the second time, both Staples and Office Depot have grown their business-to-business operations, although Staples later split apart its business-to-business and retail operations.
On Monday, Staples was already talking about doing the same with Office Depot's business, noting in its release that it might pay more were Office Depot to sell its CompuCom unit or other business-to-business operations. Last year, Office Depot announced it would downsize its retail operations, which were hurt by the pandemic, releasing plans to lay off more than 13,000 workers and permanently close more stores in coming years.
Staples on Monday expressed urgency around its proposal, saying that the "regulatory process will take at least six months." Staples has already begun notifying U.S. and Canadian regulators about its bid.
"We urge the Board to instruct management to cooperate with the regulatory authorities as soon as possible," Staples said in its release.
Office Depot didn't immediately respond to a request for comment.