Sycamore Partners Reportedly Nearing Deal to Acquire Staples
Staples Inc. wants to tell a new story—which is why the Framingham, Massachusetts-based retailer recently announced that it was overhauling its marketing. The move, according to Bloomberg, was a departure from Staples’ original mission of selling low-priced office supplies at big stores.
‘‘It’s going to convey to all audiences that Staples is much more than a retail office-supply company,” Frank Bifulco, Staples’ newly retired chief marketing officer, said of the rebrand.
Earlier this month, the struggling retailer hired Bifulco’s replacement, Michelle Bottomley, who will be responsible for helping to promote Staples’ pivot to focusing on its North American Delivery business, among other things.
But there’s still the matter of figuring out who will buy Staples. Here’s what we do know: It’s not going to be Cerberus Capital Management. Earlier this month, Staples rebuffed a takeover offer from the firm after deeming it too low. That left one interested party: Sycamore Partners.
Now, anonymous sources are telling Reuters that the private equity firm is in advanced talks to acquire Staples in a deal that could exceed $6 billion. An agreement could be announced any day, though there is a possibility that discussions could fall apart.
If this deal goes through, it could get Staples closer to transitioning its business model from a retail focus to the business-to-business sector.
Here’s why Staples is likely trying to sell:
- Plummeting stocks. One year ago, a federal judge blocked Staples’ plan to acquire Office Depot for $6.3 billion, siding with the U.S. Federal Trade Commission (FTC). The FTC argued, in December, that the proposed acquisition would violate antitrust laws, thereby reducing competition nationwide in the industry for “consumable” office supplies, including writing instruments, notepads, folders and paper products, sold to large business customers. Shares of Staples then fell to $7.75—their lowest in almost 20 years.
- Heightened competition. It’s no secret that Staples has been struggling over the last five years due to heightened completion from online giants like Amazon. Revenue declined from roughly $24.67 billion at the end of fiscal year 2011 to approximately $18.25 billion in 2016. With news like this and even this, Amazon isn’t showing any signs of slowing down.
- Retail’s grim outlook. In 2016, Staples closed 48 stores, while Office Depot shuttered 123 stores that same year amid the failed merger. Staples announced earlier this year that it would close 70 of its remaining 1,600 stores.
Stay tuned for updates.
Related story: Staples Rejects Buyout Offer from Cerberus Capital Management
Elise Hacking Carr is editor-in-chief/content director for Print+Promo magazine.