Deerfield-Based Essendant To Be Acquired By Staples

DEERFIELD, IL — Office supply company Staples is buying Deerfield-based Essendant in a deal worth nearly $1 billion. Staples, which describes itself as the largest office supplier in the world, will purchase all remaining shares of Essendent common stock for $12.80 per share in a definitive agreement announced by both companies Friday. Including debt, the transaction is valued at $996 million, as the office supply giant adds to the 11.15 percent of Essendant shares it already owns.

"We believe combining with Staples provides a tremendous opportunity to enhance our resources and ability to serve customers, while delivering compelling and certain value to shareholders." said Essendant President and CEO Ric Phillips, thanking staff for their commitment and dedication during the merger process. The deal is expected to close in the fourth quarter, both companies said in a release.

Staples previously offered $11.50 per share in May after buying nearly 10 percent of Essendant's shares. Sycamore Partners purchased Staples last year for $6.9 billion. The New York-based firm tends to buy up and break apart retail chains, as the "secretive private equity firm has been acquiring pieces of retail description to create a new retail empire through its uniquely operational approach to deal-making," according to CNBC.

"We are excited about the opportunity to move forward with this agreement, and to work with the Essendant team to complete the partnership of these two great companies, which will ultimately deliver significant value to independent resellers and end customers across the U.S.," said Framingham, Massachusetts-based Staples in a statement.

Formerly known as United Stationers, Essendant was founded in 1920 and distributes a variety of supplies to offices, industrial clients and retailers. Last year it lost $267 million, with sales falling 7.4 percent to $5.04 billion, according to Cain's Chicago Business.

Earlier this year, Essendant had entered into an agreement with Geniune Parts Company, an Atlanta-based supplier of automotive parts and office products through its brand S.P. Richards. The firm will receive a $12 million break-up covered by Staples as part of the deal, the companies said. Chair Charles Crovitz said the S.P. Richards deal had presented an attractive opportunity but the deal with Staples offered immediate and superior value to shareholders.

"After carefully evaluating Staples' revised offer, including taking into account the extended regulatory process and risks associated with the S.P. Richards transaction and the continued challenges presented by the rapidly changing industry dynamics on our ability to realize value in combination with S.P. Richards," Crovitz said, "we are confident that the Staples transaction is in the best interest of Essendant shareholders."

The price of Essendant stock has risen 36 percent on the year, rising more than 3 percent on the merger news to $13 a share, according to the Wall Street Journal. The cash value of the deal was reported to be $482.7 million.