The last of the office supply titans are in advanced talks, reports the Wall Street Journal. But one analyst says regulatory approval isn't a lay-up. Fred Katayama reports.
And then there may be one. The last of the office supply titans, Staples and Office Depot, are in advanced talks to merge, reports the Wall Street Journal. Combined, the two would have 4,000 stores and be worth $15 billion in the market. Both had been under pressure to merge from activist investor Starboard Value. One big hurdle: antitrust scrutiny. Regulators scuttled an earlier attempt by the two to combine eight years ago. But now, online retailers and big box chains like Amazon.com and Wal-Mart sell the same goods at lower prices. And regulators blessed the marriage of Office Depot and OfficeMax. So some analysts say a deal between Staples and Office Depot could get approved this time because of an increase in the number of competitors selling the same items. But Jefferies senior analyst Daniel Binder says approval isn't a lay-up, noting, "The Federal Trade Commission named Staples as a key competitor that could keep Office Depot/Office Max in check at the time of that merger, so if they combine, will the remaining competitors really represent enough competition to keep large enterprises from seeing price increases? It seems unlikely at the very large accounts where Office Depot and Staples are really the main bidders for business." Investors are betting on a deal, driving both stocks sharply higher in early trading. If they do agree and make it down the aisle, Starboard gets a huge dowry. It owns more than 5 percent of Staples and nearly 10 percent of Office Depot.