Staples seeks to buy Office Depot parent in $2.1 billion deal

There could be consolidation ahead in the office-products space, with Staples outlining Monday a proposal to acquire the parent company of Office Depot in a deal that would value the target company at $2.1 billion.

Closely held Staples, under the corporate name USR Parent, said it sent a letter to ODP laying out a plan to buy the company for $40 per share in cash. That’s a roughly 60% premium over its average closing price for the last 90 trading days.

ODP shares jumped as much as 12% in premarket trading in New York. ODP, which also owns Office Max, didn’t immediately reply to a request for comment.

A deal would bring together two of the biggest names in office supplies at a time when brick-and-mortar retailers are struggling to cope with broad economic shutdowns in the pandemic. Staples previously tried to buy Office Depot, but the $6.3 billion acquisition was called off in 2016 amid antitrust scrutiny.

Staples said it might consider upping its proposed valuation if Office Depot were to divest certain units, like its its CompuCom division or its U.S. business-to-business unit. Staples said it is prepared to divest the latter to a Federal Trade Commission-approved buyer to get past any anticipated regulatory objections.

Sycamore Partners-backed Staples has sufficient resources to finance the transaction, it said. If the company doesn’t cooperate, Staples said it will commence a tender offer in March. Certain Staples affiliates already own about 4.9% of ODP’s common stock, it said.

Staples has more than 1,000 stores, including six in the Indianapolis area. Office Depot has five area stores and Office Max has three.