Posted on 02/04/2015 9:48:07 AM PST by SeekAndFind
In a move expected to accelerate the shutdown of office-supply stores across the U.S., Staples Inc. has agreed to pay stock worth $6.3 billion to acquire rival Office Depot, which last year absorbed the former Office Max chain. The price works out to $11 per Office Depot share, up from $7.60 on Monday (Office Depot shares started rising Tuesday as deal rumors were reported in the financial news).
"Financially this transaction makes sense and is necessary to the longterm health of these two companies," retail analyst David Strasser told investors for Janney Capital Markets in a report today. Both Staples, which has more than 2,000 U.S. stores, and Office Depot, which has over 1,000, have recently announced store closings as they struggle with online competition from Amazon.com and others. That will accelerate, since roughly half of Office Depot stores are within 5 miles of a Staples.
Strasser expects the merger partners will close 1,000 stores in the next couple of years, slicing $1 billion off the chains' combined expenses. The shutdowns will also reduce the income of America's retail landlords by $350 million/year. Strasser estimates the partners will also cut advertising, currently $1 billion/year ($500 million for each of Staples and Home Depot), to about $600 million.
Staples already has one of the largest online retail operations in the U.S. and has partnered with manufacturers to ship direct, but has had a tough time squeezing profits from digital sales. It could take 9 months to get the deal past the Federal Trade Commission, which may require the companies to sell some stores to other operators; foreign operations could also complicate a final agreement.
(Excerpt) Read more at philly.com ...
After their latest bait-and-switch rebate screw job, I decided my locally-owned office store deserves my business a lot more than Staples does.
So, Office Depot, Office Max and Staples are now one company. Whats next? Standard Oil coalescing?
...
They’ll still have online competitors.
Now All Restaurants are Taco Bell (from Demolition Man)
I used to get the ads for all three office supply stores to see if they had anything interesting on sale. Then there were only two with Office Depot merging with Office Max. Now there will be only one... and Amazon.
One Company for each industry/market.
best for shareholders, best for America.
like pawnshops, payday loans, nail salon, 2nd hand store, Gamestops. Cool stuff like this.
Just anecdotal evidence, when I have gone to Office Depot, the store is almost empty. There are only 1,or 2 other shoppers In the store Whenever I have gone there. There are more employees than shoppers. I go there often, at different times of day. I have wondered how much business they were really doing.
I run a small business and have been using Staples for years. Once a week or so, I stop in the neighborhood store and stock up on basic business supplies. Papers, inks, envelopes, and odds and ends that we end up needing. It is becoming more and more difficult to shop there. They are constantly moving the inventory around the store! You can’t find anything! That’s why your employees take so long. They play hide and seek with the items. I want to get in and get out, not spend my afternoon “Shopping.” The management of Staples has no idea who their customers are.
All their in store promotions ask you to purchase on line. All their employees tell you to purchase the stuff you can’t find (which may be in the store) on-line. When I do, it’s not going to be from Staples, when Amazon is half the price.
It’s too bad, they drove the local Mom and Pop business supply stores out of the neighborhood, now they don’t want to have a store themselves.
Chuckle. Great movie.
What frustrates me about all these stores is when you need something today, you go there and pay 4 times what you would pay at monoprice.com for the same item.
I get paying extra for their convenience and their location, but not that much. There is also never anyone knowledgeable to help you if you’re looking for something.
Seems like it’s been in the works for a while - OD going, going, gone...
In my small (University) town we have two Staples and an OD.
Staples was set to close some stores (probably did, just not here) - yet OD has been on a skeleton staff for the last six or more months...
NO ONE asks if they can help you - only two employees at the copy ‘center’ and they do all of the selling and refunding and copying...
The Misses and I used to go there and do 20,000+ copies per year in their copy center (occasionally Staples).
Snarky staff at both places - Imagine a $1,000 order and you treat the buyer with disdain - ‘don’t think you can do this again without a day’s notice!’
Now, I have a very good dedicated printer and we print on our own schedule (we do not spend four hours at OD correcting their atrocious errors) - and save LOTS of money.
Frankly, I hardly EVER buy products at Staples or OD anymore. We have a Wal-Mart, a Costco and the internet - all with longer return envelopes, lower prices and better customer service...
</rant>
Whenever possible, I purchase office supplies at Sam’s Club.
Their prices on supplies like bubble wrap and bubble mailers are MUCH cheaper than Staples. Same with printer paper and file folders.
I hope the little neighborhood stores continue to find a niche. My problem is kids with school projects that I don't know about ahead of time. This, of course, is always when one runs out of ink or paper. The local Staples is 15 minutes away, which isn't too bad, but I've been bailed out more than once by a tiny Radio Shack about eight blocks away that is open an hour later. I will pay for convenience and extended hours. So will a lot of other people. The trick is sizing these stores appropriately so they are profitable.
I hear ya’
Postal workers have criticized Staples for years for operating “mini post offices” in dozens of stores. The union says the locations, which are staffed by Staples employees, are exacerbating the Postal Service’s financial problems.
When K-Mart bought Sear’s, they started closing Sear’s and K-Mart stores left and right, combining some. Their parking lots are just as empty as they ever were.
Dance clubs.
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