Staples, parent company of Top 40 distributor Staples Promotional Products (asi/120601), and Office Depot have agreed to extend the deadline for their merger to help fight off a legal challenge by the Federal Trade Commission. The office supply companies, which originally had until February 4, announced today they moved the date to complete their agreed-upon merger to May 16.
Last month, the FTC filed a lawsuit that contended the proposed $6.3 billion merger of North America’s two largest office supply chains would create an anti-competitive environment. The FTC’s greatest concern was that the merger would affect service levels and prices for the companies’ b-to-b segment, which provides office supplies to businesses. The companies had proposed divesting $1.25 billion in contracts in the segment, but the FTC rejected the offer and is continuing with its opposition in court.
“This merger creates an unparalleled opportunity to better serve our customers and to deliver shareholder value,” said Ron Sargent, CEO of Staples. “We are committed to completing this transaction and look forward to a full and impartial judicial review.”
If the companies fail to complete their merger, Staples has agreed to pay Office Depot $250 million. The three-month extension is subject to the companies extending financing terms, which they said they are currently working on.
Along with the FTC’s lawsuit, The Sun-Sentinel reported that Lowe’s, AAA and Ecolab have filed objections to prevent their confidential information from becoming available to the attorneys from Staples and Office Depot. On January 10, a court order was modified that removed protection of proprietary information of these companies, who are clients of Staples and Office Depot. The companies had submitted documents regarding its office supply purchases to the FTC in cooperation with its investigation.