Staples reaches agreement to get Corporate Express

Staples will move more into office delivery with the deal.

BOSTON (AP) — Staples Inc.’s four-month campaign to acquire Corporate Express NV finally yielded an agreement Wednesday, a $2.7 billion deal that Staples hopes will put further distance between itself and U.S. rivals Office Depot and OfficeMax. Its two rivals combined would be smaller than Staples once the deal closes.

With U.S. retail sales of office supplies slumping, Staples also hopes to expand in the more profitable business of delivering office supplies to corporate customers — Corporate Express’ strength — and build off the Netherlands-based company’s clout in Europe.

“We’re going to go from a company where retail is about 60 percent of our sales to a company where delivery is about 60 percent of our sales,” Ron Sargent, chairman and chief executive of Staples, said in an interview. “That is really transformational.”

The agreement thwarts a competing deal Corporate Express had reached three weeks ago to acquire France’s Lyreco SAS, which is now expected to receive a $46 million breakup fee from Corporate Express.

Staples wooed Corporate Express by raising its offer three times after its original Feb. 19 cash bid of 7.25 euros per share. The final price of 9.25 euros per share is up from Staples’ offer last week of 9.15 euros, which enticed Corporate Express’ management to enter talks. The Dutch firm had earlier resisted negotiations even as Staples brought its hostile offer directly to Corporate Express shareholders.

“I think the paper clip wars are over, and it’s a win for both sides,” Sargent said.

The final increase in the bid amount “was a small price to pay for the full support of Corporate Express’ management,” Sargent said.

Dan Davidowitz, a portfolio manager with Polen Capital Management, which holds about $18 million worth of Staples shares, said the final offer was near the upper end of what his firm believes was a fair price.

If European regulators approve and the deal closes as expected next month, the U.S. firm would also assume about $1.7 billion in Corporate Express’ debt, in addition to buying up the company’s shares.

“We like the deal, especially now that it’s friendly, and the companies can move quickly to get it done and integrate,” Davidowitz said.

Staples shares rose $1.07, or 4.6 percent, to $24.22 in afternoon trading. American Depositary Shares of Corporate Express rose 44 cents, or 3.1 percent, to $14.44.