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Corporate Express Thwarts Staples' Bid

Amsterdam, Netherlands Office-supplies distributor Corporate Express NV showed its determination to fend off a hostile takeover by Staples Inc. on Wednesday, announcing plans to instead buy French peer Lyreco SAS for about $2.7 billion in cash and shares.

If approved by shareholder and regulators, a Corporate Express-Lyreco combination would create a sizable international competitor to Massachusetts-based Staples. Corporate Express-Lyreco would be larger than Staples in business-to-business sales in the United States, Europe and Asia.

Lyreco, like Corporate Express and unlike Staples, sells office supplies only to other businesses.

Corporate Express' board rejected a $2.47 billion takeover offer from Staples last week, saying it undervalued the company. Staples took its hostile bid directly to Corporate Express shareholders on Monday.

This is the most logical and compelling merger one could envision in our industry," said Corporate Express chief executive Peter Ventress in a statement. "The two businesses are highly complementary."

The price Corporate Express is paying for Lyreco is more than its own market capitalization of 1.4 billion euros ($2.2 billion) as of Wednesday morning, and the Dutch company would issue shares, pay cash and take on debt to fund the acquisition.

It said that it would pay Lyreco shareholders 102.5 million new ordinary shares, representing 29.9 percent of its outstanding capital, 560 million euros ($877 million) in cash and 340 million euros ($532 million) in debt. The share component is worth around 830 million euros ($1.30 billion) at Corporate Express's closing price Tuesday.

Analysts said the move was a crafty way for Corporate Express to take advantage of its share price—which has nearly doubled since Staples began courting it in February—to thwart the American company.

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