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Staples show how bad it wants to get Office Depot deal done

BY Mike Troy

Staples secured approval of its acquisition of Office Depot from European regulators after agreeing to numerous concessions. Now similar actions may be required if the company is to win over a stubborn U.S. Federal Trade Commission.

Staples said it received approval from the European Union to acquire Office Depot, highlighted a range of actions it took to alleviate the regulator’s competitive concerns and used the action to take a jab at the U.S. Federal Trade Commission (FTC).

"This is a significant step, and we're very pleased that the European Commission has approved this transaction," said Ron Sargent, chairman and CEO of Staples. "The acquisition has been approved in Australia, New Zealand, China, and Europe. Regulatory agencies around the world understand that this acquisition will allow Staples to provide increased value and service to customers of all sizes. We look forward to a full, impartial judicial review in the United States."

The merger was announced on Feb. 4, 2015 and is the subject of ongoing litigation with the FTC as well as the Canadian Competition Bureau. The companies recently announced the completion of financing arrangements and also extended the date of their merger agreement until May 16 to allow time for the completion of ongoing federal district court litigation with the FTC.

To overcome regulator’s concerns in Europe, Staples agreed to divest Office Depot's European contract business, all of Office Depot's operations in Sweden and Office Depot's retail, online and catalog operations in Europe. The divestiture of Office Depot's European business is subject to the closing of the acquisition, according to Staples.

If the deal is eventually approve, Staples maintains that it will be able to deliver more than $1 billion of annualized synergies net of investments to provide increased value to customers by the third full fiscal year post-closing. In addition, the combined company will be better equipped to minimize redundancy, reduce costs and optimize its retail footprint, according to Staples.

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