Experts say that two of the biggest office supplies retailers in the US, Staples and Office Depot, should make this second time merger a charm as they test the view of antitrust regulators in the ever changing retail landscape.
Staples is the No. 1 office supplies retailer in the U.S. while Office Depot Inc. is the No.2 and these two companies are planning a merger. Staples is expected to acquire Office Depot for $6.3 billion. They will join forces to strongly compete with other big box stores as well as their online rivals like Amazon and eBay.
It can be recalled that the two companies agreed to merge back in 1996 but the move was derailed because of a government lawsuit that was able to successfully argue the plan saying that if it pushes through, it should increase the prices of paper, pens as well as other office supplies in a lot of cities in the U.S.
This time around though, the Federal Trade Commission (FTC) that’s often skeptical when it comes to the hooking up of Staples and Office Depot is believed to approve the move according to some antitrust experts.
Seth Bloom, a veteran of the antitrust division of the Justice Department who is already in private practice, said that she feels like there’s a good chance that the deal will be approved by the Federal Trade Commission.
Since the failed merger back in 1996, online sellers like Amazon have dominated the market while Wal-Mart and other megastores started to crowd the market.
The review that will be conducted by the FTC regarding the new deal will likely take months or more and it will focus on whether or not the prices have increased when OfficeMax was bought by Office Depot. Unless the FTC finds that the acquisition resulted to an increase in prices, the transaction between Staples and Office Depot should also have a fair chance at clearance.
To fund the deal, Staples said that it has secured a $3 billion credit facility plus a $2.75 billion loan financing with a term of six years.