On Wednesday, Staples announced it had entered into an agreement to purchase Office Depot for $6.3 billion in cash and stock. The merger came after a concerted effort by activist hedge fund Starboard Value. But it also came nearly two decades after a previous attempt to combine the two companies. That effort was foiled by antitrust issues, but this time the outcome may be different.
In the 1990s, the Federal Trade Commission decided that a merger between Office Depot and Staples would result in higher prices for consumers, according to Michael Keeley, an antitrust lawyer with Axinn Veltrop & Harkrider.
The rise of big-box stores and online retailers like Amazon have since changed the competitive landscape, says Robert Salomon, an associate professor of management and organizations at NYU’s Stern School of Business.
Chris Christopher, an economist in charge of consumer markets at IHS Global Insight, says office supply and stationary retailer sales have been declining since 2008, and are expected to contract from $17.1 billion in 2014 to $15.9 billion in 2015 — a decline of 7 percent.
Keeley expects that Staples and Office Depot will argue that the changed competitive environment means a merger no longer allows them to control prices, but is simply about survival in a declining market. But FTC approval is never certain.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.