martinwolf
Transaction Analysis
Staples in Discussion of Potential Takeover
Financial Information*
- Potential Enterprise Value $7 billion*
Transaction Facts
- According to the Wall Street Journal, Staples (NASDAQ: SPLS) is in discussions with private equity firms regarding a potential sale of its business.
- Shares shot up 10 percent in light of the news, an anomaly in the consistent trend of decline. In the twelve month period before today, shares had fallen 23 percent.
- The company has not seen growth in a decade, recently reporting its fifth-straight drop in annual sales. This reflects a broader industry trend-- sales of office supply stores in 2016 were $8.3 billion, half off the $16.6 billion reported in 2007.
- At its height, Staples operated nearly 2,300 stores, but today the office supply giant operates only 1,500. The company announced in March its plans to close an additional 70 this year.
- Staples has struggled to develop a new strategy following the blocking of its proposed merger with rival Office Depot by a federal judge last year. In response to declining revenue, both companies have pursued similar strategies, selling most of their European operations.
Survival of the Fittest
- Retail Woes: In the age of Amazon, all retailers have to find ways to curtail losses by adapting to the changes or opting out. The retail sector of the US will see more than 3,500 stores close in the next few months.
- IT Involvement: Staples moved to focus on core services, building their technology capabilities by investing in their Technology Solutions, Data Center Management, eCommerce and B2B platforms. The company sold its managed services unit, Thrive Networks, to telecom services player MetTel in September 2014 (we advised Staples in the transaction).
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 Private Equity, A Familiar Face: Staples has dealt with private equity before. In December, Staples agreed to sell a majority stake in its European units to private equity firm Cerberus Capital Management, and in November, the UK division was acquired by private equity firm Hilco Capital, which had purchased the European Technology Products Group units from Systemax in late March of this year. Staples was first financed with Bain Capital in 1986, and grew massively after it went public in 1989.
- Revamping: A typical buyout premium could value the company at $7 billion* or more, which would allow the company to focus on making itself competitive again. CEO Shira Goodman stated, "We have to move the brand," indicating the buyout would allow the business to jump fully on board with the demands of the e-commerce era.
For more information,
click here to read the report in The Wall Street Journal.
*Financial information is based on figures cited in this article.
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With offices in New York and the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 150 transactions in over 20 countries and sold seven divisions of Fortune 500 companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com. To learn more about martinwolf, contact Matthew Putzulu at [email protected]. © martinwolf 2017 |
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