Staples, Office Depot expect second time a charm in merger

Wed Feb 4, 2015 4:32pm EST
 
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By Yashaswini Swamynathan and Diane Bartz

(Reuters) - Staples Inc (SPLS.O: Quote) and Office Depot ODP.O should find the second time is a charm as the top two U.S. office supply chains once again test the views of antitrust regulators in the rapidly changing retail landscape, experts said on Wednesday.

Staples, the No. 1 U.S. office supplies retailer, and No. 2 Office Depot Inc announced on Wednesday a $6.3 billion plan to join forces to compete against big box stores and online rivals.

The first time the two agreed to merge -- in 1996 -- the deal was derailed by a government lawsuit that successfully argued the move would have meant higher prices for pens, paper and other office supplies in a long list of U.S. cities.

But this time around the Federal Trade Commission, which is often skeptical of any bid by the top two firms in a sector to hook up, is likely to approve the deal, four antitrust experts said.

"I think there's a fair chance for this deal to be approved," said Seth Bloom, a veteran of the Justice Department's antitrust division who is now in private practice.

Since the failed deal, Amazon (AMZN.O: Quote) and other online sellers, which can deliver to almost anywhere, have exploded onto the scene, while megastores like Costco (COST.O: Quote) and Wal-Mart Stores Inc (WMT.N: Quote) are also crowding the market.

The FTC noted precisely these changes when it approved Office Depot's purchase of No. 3 OfficeMax in November 2013, and seemed to argue that it no longer made sense to have a separate market niche for office superstores, Bloom said.

The FTC required no asset sales in approving that deal.   Continued...

 
A shopping cart is seen outside a Staples office supplies store in the Chicago suburb of Glenview, Illinois, February 4, 2015. REUTERS/Jim Young