Tags: Staples | hostile | bid

Staples in $2.34 Billion Hostile Bid for Dutch Rival

Monday, 19 May 2008 05:37 PM

AMSTERDAM -- U.S. office supplies retailer Staples launched a hostile $2.34 billion bid on Monday for Corporate Express because the Dutch office supplier was unwilling to negotiate.

Staples said in a statement that Corporate Express shareholders could tender their shares as of Tuesday until June 27, subject to a possible extension.

Corporate Express last week rejected Staples sweetened offer, saying it was still significantly undervaluing the company, but it was willing to talk. Staples had raised its offer to 8 euros per share from 7.25 euros.

Corporate Express was not immediately available for comment.

Staples confirmed the offer price of 8 euros per share and, based on 182.848 million Corporate Express shares outstanding, the equity value is worth 1.46 billion euros. Including net debt, the bid is worth about 2.8 billion euros, Staples said.

Staples, which competes with U.S. rival Office Depot, has secured a $3 billion credit line for the deal.

"We are making this offer directly to the shareholders following Corporate Express' unwillingness to allow us to perform due diligence and negotiate a transaction," Staples Chief Executive Ron Sargent said in the statement.

A tie-up between a retailer and wholesaler of office supplies would make strategic sense and could lead to big savings at a time when both companies are trying to deal with a downturn in the U.S. economy, analysts have said.

Staples gets more than half of it sales, totaling $19.4 billion in 2007, through its retail outlets and operates more than 2,000 stores worldwide, but its business-to-business operations are more profitable.

The shares in Corporate Express, which had 5.6 billion euros of sales in 2007, have been trading above 8 euros since Staples had increased its offer and some analysts have said Staples would need to raise its offer further to clinch the deal.

Corporate Express shares closed at 8.10 euros on the Amsterdam exchange on Monday. Analysts at Rabo Securities have said a raised offer could be as high as 9 euros.

Staples shares, which have gained about 8 percent since the company raised its offer last week, closed down 1.09 percent at $23.57.

Staples said it would declare its offer unconditional if it could obtain at least 75 percent of Corporate Express' ordinary shares and met certain other conditions.

It expected antitrust clearance for the deal in Canada and the European Union in the next few weeks and it had already obtained U.S. antitrust approval.

Staples offered 3.15 euros per unit for Corporate Express preference A shares, which closed at 3.12 euros and are worth 166 million euros, Euronext exchange data showed.

The U.S. company also offered 1,164.72 euros per unit for Corporate Express' 2010 convertible bond and it expected to launch offers later this week for debt issued by Corporate Express U.S. Finance Inc.

Corporate Express had 1.087 billion euros in net interest- bearing debt on March 31, it said earlier this month.

Lehman Brothers Holdings Inc is providing Staples with financial advice; Clifford Chance and WilmerHale are providing legal and tax advice; and Weil Gotshal & Manges is providing antitrust advice, Staples said.

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AMSTERDAM -- U.S. office supplies retailer Staples launched a hostile $2.34 billion bid on Monday for Corporate Express because the Dutch office supplier was unwilling to negotiate.Staples said in a statement that Corporate Express shareholders could tender their shares as...
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