Staples in $6.9B deal to be acquired by Sycamore Partners

Staples agreed Wednesday to be acquired by private equity firm Sycamore Partners for $6.9 billion, a deal that will dramatically restructure the struggling office supply retailer that has already been shrinking.

Staples’ shareholders will receive $10.25 per share in cash, a premium of about 11% before traders learned of the deal Wednesday afternoon.

Shares of Staples rose 8.4% to close $9.93 Wednesday. They were up an additional 2% in pre-market trading Thursday. 

Staples has been in talks with private equity firms for weeks for a deal. Investors have been aware of their talks at least since April 3, when news headlines of their talks began to emerge. Shares rose sharply on that day, but trading has been volatile since as a firm deal hadn't appeared. 

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The deal, which still requires Staples shareholders' vote, is expected to close by the end of the year.  

Like other big-box retailers, Staples, which runs 1,240 stores in the U.S., has been struggling to revive sales as individual and business customers increasingly turn to online shops, such as Amazon, that can afford to offer deep discounts.

In the first quarter, its sales fell 5% year-over-year to $4.1 billion. The Massachusetts-based company closed 48 stores in North America last year, and announced in March plans to close 70 more this year. 

Stefan Kaluzny, managing director of Sycamore Partners, expressed "tremendous confidence" in Staples CEO Shira Goodman, and said his firm will look "to accelerate long-term profitability.”

"Staples’ board believes that this process has led to a transaction which is in the best interests of our stockholders, as well as Staples and its employees,” said Robert Sulentic, Staples' chairman of the board of directors. 

In 2015, Staples and rival Office Depot agreed to merge in hopes of becoming larger to compete against Amazon and others. A year later, federal regulators blocked the deal, citing antitrust concerns that the merger would give too much power to the combined company in the market for commercial office supplies.

Private equity investors then stepped in, engaging Staples executives for acquisition talks. Cerberus Capital Management, a New York-based private equity firm, was also said to be in the running for a deal.  

Sycamore specializes in reviving retail companies. Its assets include women's clothiers Talbot, Coldwater Creek and The Limited. Sycamore acquired The Limited out of Chapter 11 bankruptcy earlier this year.