Office Depot has rejected a $2.1 billion takeover bid from its rival Staples, according to a letter sent by Joseph Vassalluzzo, Chairman of Office Depot parent company ODP. The letter said, in part, “the board has unanimously concluded that there is a more compelling path forward to create value for ODP and its shareholders than the potential transaction described in your proposal.”
While ODP rejected Staples’ proposed plan, the letter said the company is open to a different type of deal that would be subject to less regulatory risks, such as a joint venture or Staples acquiring ODP’s retail and consumer-facing ecommerce operations.
“Though both of these options require regulatory approval, we believe the regulatory risk of pursuing a retail-only transaction to be significantly lower than your proposed transaction,” Vassalluzzo wrote, adding: “If Sycamore remains determined to propose a potential acquisition of the entire company, we call on you to expressly address the regulatory uncertainty by committing to bear the risk of potential antitrust obstacles or required remedies through a customary ‘hell or high water’ provision.”
This marks the third time the companies have attempted a merger — the previous attempts were shut down in 2016 and in 1997 due to antitrust concerns.