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US court blocks Staples’ multi-billion dollar acquisition of Office Depot

US court blocks Staples’ multi-billion dollar acquisition of Office Depot

Judge claims proposed merger would “substantially impair competition” in the sale and distribution of consumable office supplies to large Business-to-Business.

A US Federal judge has blocked Staples’ proposed $US6.3 billion acquisition of Office Depot, claiming that the merging of two industry giants would reduce competition in the market.

Citing rising price concerns for customers in the ruling, the collapse of the deal puts a stop to the combination of the two largest office supply retailers in America, halting a merger that also hit the blockers nearly two decades ago.

“Today’s court ruling is great news for business customers in the office supply market,” Federal Trade Commission, Director, Debbie Feinstein said in a statement.

“This deal would eliminate head-to-head competition between Staples and Office Depot and likely lead to higher prices and lower quality service for large businesses that buy office supplies.”

In the ruling, the judge claimed the proposed merger would “substantially impair competition” in the sale and distribution of consumable office supplies to large Business-to-Business.

Under the terms of the merger agreement, Staples will pay Office Depot a $US250 million break-up fee with the company also planning to terminate its agreement to sell more than $US550 million in large corporate contract business and related assets to Essendant in connection with the termination of the merger.

“We are extremely disappointed that the FTC’s request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case,” Staples CEO, Ron Sargent, added.

“We believe that it is in the best interest of our shareholders, customers, and associates to forego appealing this decision, terminate the merger agreement, and move on with our strategic plan to drive shareholder value.

“We are positioning Staples for the future by reshaping our business, while increasing our focus on mid-market customers in North America and categories beyond office supplies.”

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