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Staples buy unlikely to impact Corporate Express IT operations

Staples buy unlikely to impact Corporate Express IT operations

Leading analyst claims Staples will retain local majority shares in Corporate Express operations

The planned takeover of Dutch office products supplier, Corporate Express, by US rival, Staples, is unlikely to have any short-term impact on the Australian arm of Corporate Express, or its IT reseller operations, according to a leading analyst.

Corporate Express NV's management team recommended shareholders approve a Euro9.25 per share bid by the office and technology retail chain last week. The decision follows months of negotiation and is due to be completed in August.

Once completed, Staples will hold a majority 59 per cent stake in the Australian listed Corporate Express business. CommSec head of small companies research, Sean Cooney, predicted Staples would hold onto the majority share and ruled out any short-term changes.

"Nothing is going to happen quickly - Staples will need to integrate the businesses in Europe and North America, and that's going to take a long time," he said. "Corporate Express Australia is a well run business in terms of the broader group - it's one of the best.

"Staples has no other presence in A/NZ, so we expect they will let them alone and just monitor the company for the next 18-24 months. They could then take out the majority of shares."

While it was very early days, Corporate Express managing director, Grant Harrod, saw the combined might of Staples and Corporate Express as a big opportunity.

"Staples is a highly respected organisation and its success and size gives us the opportunity to offer our global customers single agreement across more countries," he said. "We're excited about it and looking forward to the ideas flowing."

Unlike overseas operations, the local Corporate Express business is a significant IT reseller.

Harrod pointed out its IT business was an important and successful piece of Corporate Express Australia's single source strategy.

"We're happy with the way the business has grown over the past seven or eight years," he said. "There's many shared suppliers - HP for example supplies us with IT and office products, as does Lexmark.

"IT is not replicated within the Corporate Express group but then we also have other things that aren't replicated overseas either. We've always had our own strategy locally and it's well supported."

On the other hand, given Staples' retail strength in North America, CommSec's Cooney said the merged entity could look to break into Australia's retail market. Corporate Express is solely focused on B2B locally.

However, any move into the retail market could prove challenging. Mass merchant, Harvey Norman, recently unveiled its first office supplies store, Ofis, earlier this year and Officeworks would also provide stiff competition.


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