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Bryan E. Kuhn
Counselor at Law, P.C.
Business & Employment Law Attorney

Office-supply chain merger wins approval

The proposed merger of two large office-supply chains with locations in Colorado and nationwide recently obtained regulatory approval from the U.S. Federal Trade Commission. In the transaction, Office Depot Inc., the second largest office-supply retailer in the country behind Staples Inc., will acquire OfficeMax Inc., the third largest. After the merger, the new company will account for $18 billion in annual sales, still trailing industry leader Staples which has sales of $24 billion.

The FTC recently closed its investigation of the merger by announcing that the acquisition would not harm the competitiveness of the industry because of the presence of online retailers and big box suppliers such as Walmart. The agency derailed an attempt by Staples to purchase Office Depot in 1997 but believes that the market has significantly changed since that time.

Many experts believe the move was one that needed to be made. The combined chain will now have more power to negotiate with vendors and will allow for the closure of stores that are under-performing or in redundant locations. While the number of closings has yet to be determined, the merger is expected to produce approximately $600 million in other cost savings. It is not yet known who will be picked to head the new entity nor which name it will use.

Mergers and acquisitions play an important role in many industries and for businesses of all sizes. Even when antitrust considerations are not at issue, there are likely to be other regulatory compliance matters to take into account. Federal and state securities laws and regulations, as well as relevant state corporate laws, need to be followed.

Source: Bloomberg, “Office Depot Merger With OfficeMax Wins U.S. Approval“, David McLaughlin & Matt Townsend, November 01, 2013

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