Staples makes $996 million deal
Staples has won the battle for office and workplace supplies company Essendant Inc.
Staples and Essendant have entered into a definitive agreement under which an affiliate of Staples will acquire all of the outstanding shares of Essendant common stock for $12.80 per share in cash, or a transaction value of $996 million including net debt. Essendant is a Deerfield, Ill.-based supplier of office, workplace and industrial products that it sells to a diverse group of customers, including independent resellers, national resellers and e-commerce businesses.
The agreement comes after Staples raised its bid for the office supplies reseller, having previously offered $11.50 per share. The higher officer caused Essendant to jettison a prior merger proposal with Genuine Parts Co., which said it does not expect to make any counterproposals. In connection with the termination, GPC is entitled to a $12 million break-up fee, which Staples is paying as part of its agreement with Essendant.
“We are excited about the opportunity to move forward with this agreement, and to work with the Essendant team to complete the partnership of these two great companies, which will ultimately deliver significant value to independent resellers and end customers across the U.S.,” Staples said.
Private-equity firm Sycamore Partners, which acquired Staples over a year ago, already owns about 11% of Essendant.
“After carefully evaluating Staples’ revised offer, including taking into account the extended regulatory process and risks associated with the S.P. Richards transaction and the continued challenges presented by the rapidly changing industry dynamics on our ability to realize value in combination with S.P. Richards, we are confident that the Staples transaction is in the best interest of Essendant shareholders,” said Charles Crovitz, chairman of Essendant. “While our agreement to merge with S.P. Richards presented an attractive opportunity, we believe the Staples transaction provides superior and immediate value to our shareholders.”
Essendant provides access to a broad assortment of over 170,000 items, including janitorial and breakroom supplies, technology products, traditional office products, industrial supplies, cut sheet paper products, automotive products and office furniture.
Henri Bendel to go out of business
The upcoming holiday season will be the last one for upscale specialty retailer Henri Bendel, which has been in business for 123 years.
L Brands, which acquired Bendel in 1985, announced it will close all 23 Henri Bendel stores and its e-commerce website. The stores, which include the company’s ornate and lavish flagship on Manhattan’s Fifth Avenue as well as smaller-format locations in 11 states, and website will go dark in January. New merchandise will continue to arrive throughout the holiday season.
L Brands said it was making the move as part of its ongoing effort to improve overall business performance and increase shareholder value by focusing on its core brands, which include Bath & Body Works and Victoria’s Secret.
“As part of that effort, we have decided to stop operating Bendel to improve company profitability and focus on our larger brands that have greater growth potential,” said Leslie Wexner, chairman and CEO of L Brands. “This decision is right for the future growth of our company, but not easy because of the impact to our L Brands family.”
Bendel has been struggling with sluggish sales for some time. It also has faced merchandise challenges. In 2014, the retailer cut ties with third-party vendors, reported Women’s Wear Daily, to concentrate on selling accessories under its own label, along with beauty items.
L Brands said that Bendel’s 2018 revenues and operating loss, excluding closing costs, will be approximately $85 million and $45 million, respectively. The company is in the process of estimating the costs associated with closing the business.
The associates who stay with Bendel through January will be offered retention bonuses. At the point when associates’ positions are eliminated, they will be invited to interview for open positions within the company or will be offered separation pay and job search support services.
L Brands, through Victoria’s Secret, PINK, Bath & Body Works, La Senza and Henri Bendel, operates 3,084 company-owned specialty stores in the United States, Canada, the United Kingdom and Greater China , and its brands are sold in more than 800 additional franchised locations worldwide. The company’s products are also available online.
Sears Q2 loss widens; hints at more store closings
Sears Holdings Corp.’s revenue dropped 25% in the second quarter as the chain continues to shrink its footprint.
Sears said it lost $508 million, or $4.68 a share, in the quarter ended Aug.4, compared with a loss of $250 million, or $2.33 a share, in year-ago period.
Sales fell to $3.18 billion from $4.27 billion last year amid store closures. Same-store sales decreased 3.9%, the smallest decline in over three years. By banner, same-store sales fell 3.7% at Kmart and 4% at Sears.
In a statement, Sears chairman and CEO Edward Lampert said he encouraged by the quarter’s improved comparable stores sales trend and the positive comparable store sales of 3.0% and 2.5% achieved in the months of July and August, But he noted that the company has not met its goal of returning to profitability, and hinted that more store closings may be in the offing. (In August, Sears announced it was closing another 40 stores.)
“We continue to close unprofitable stores, and we are hopeful that we can stabilize our store base at a meaningful level in the near future,” he said. “Our goal is to right-size our store footprint to a solid base from which we can operate and grow profitably, while leveraging our online and Shop Your Way platforms.”
Lampert gave an update on Sears in a blog post on the chain’s website in which he discussed the chain’s precarious financial condition.
“We have worked hard to make the best possible decisions for the company given the options available to it and the variety of constraints it has faced,” Lampert wrote. “We continue to believe that Sears can successfully evolve into a smaller but profitable company. … This can only happen with the cooperation of our various stakeholders and with the monetization of further assets that can be reinvigorated independently and without the financial constraints of Sears Holdings.”
He also noted the critical role ESL — the hedge fund controlled by Lampert — has played in the company.
“To date, ESL has been willing to provide financing on terms that were at least as favorable as might be achievable in the market and, when practical, was on a basis that allowed other investors to participate on the same terms,” he wrote. “This funding has given the company time it would not otherwise have had to adjust its operations, attempt to return to profitability, and maximize its asset values. … We continue to believe that it is in the best interests of all our stakeholders to accomplish this as a going concern, rather than alternatives that could result in significant reductions in value.”