Staples To Buy Office Depot For $6.3 Billion

An anonymous reader writes: Today Staples announced plans to buy Office Depot in a deal worth $6.3 billion. This is a huge consolidation within the office supply industry. Office Depot and OfficeMax were the second- and third-biggest suppliers when they merged in 2013. Adding those to the enormity of Staples would effectively bring the U.S. under a single office supply chain. "The move is expected to draw scrutiny from the Federal Trade Commission, though regulators have been increasingly willing to approve retail mergers in light of burgeoning e-commerce competition. ... This isn't the first time Staples has tried to buy Office Depot. In 1997, the FTC derailed Staples' acquisition of its rival as anticompetitive. By 2013, though, the agency's view had shifted. When the FTC allowed Office Depot to buy OfficeMax, it said the advent of online retailing ensured competition in the market for office supplies. Consumers today also rely more heavily on big-box chains such as Wal-Mart Stores Inc. for office products, the commission said."

Comments

No problem getting this merger passed

[Anonymous Coward]

They'll just push the Easy Button and it will fly through the FTC, right?

Re:No problem getting this merger passed

[q4Fry]

New company slogan: The Only Button.

Next RadioShack

[Luthair]

Is anyone else surprised Staples isn't bankrupt? No one ever goes there and the only time I hear about Staples is when a deal site mentions yet another category is on clearance.

Re:Next RadioShack

[Primate Pete]

As I recollect, Staples does huge business with small and medium companies, mostly on a delivery basis. Having been in their stores, I doubt walk-in customers are a large part of their revenue. One potential outcome here would be for Staples to close its retail locations (they suck) so that that the better-stocked Office Depot can handle individual/walk-in customers while the Staples brand focuses on the B2B market via internet & delivery.

That said, I don't have a good feeling about the decrease in the number of office supplies stores near my home, which WILL decrease my options.

Re:Next RadioShack

[bws111]

Apparently 'no one' bought $22.7B worth of stuff last year, with EBITDA of $1.46B.

Re:Next RadioShack

[netsavior]

A Staples store is a warehouse for their office supply delivery business. The retail presence is more there for brand awareness and a showcase.

To contrast, Radio Shack is a cellphone kiosk that once sold electronics.

This is about like wondering how Bank of America can stay in business if nobody uses safety deposit boxes anymore.

New name: Staples Depot, Office Staples

[JoeyRox]

Or my favorite, "Antique Supply Store"

Re:Great

[MightyYar]

How so? There is a lot of competition in this space. In the Northeast you are probably familiar with WB Mason, which does not use the retail store model. If you are a consumer, Walmart sells toner for most home printers (and obviously paper as well). For businesses, there are plenty of "Dunder Mifflins" out there. Costco, Sam's Club, etc. And then there is the explosion of internet-only office supply companies.

Just a theory

[Andrio]

I think if someone were to create a simulation model of a truly free market with no regulation, and seed it with hundreds (thousands) of little businesses to start with, given enough time, you'll end up single monopoly that controls every industry, service, and product.

Re:Just a theory

[RabidReindeer]

I think if someone were to create a simulation model of a truly free market with no regulation, and seed it with hundreds (thousands) of little businesses to start with, given enough time, you'll end up single monopoly that controls every industry, service, and product.

It seems to depend on what the business is. If a business is capital-intensive, commodity-based and can benefit from economies of scale chances are that, yes, a positive feedback loop will be established and, as the old maxim goes, "nothing succeeds like success".

On the other hand, not all businesses are driven solely on price. Multiple big players exist in such things as fast food and pizza joints, but within the big chains, I'll avoid MacDonalds and hit Burger King because to me McD's milkshakes taste like library paste. And the local neighborhood pizzaria beats Papa John's 20 ways from Sunday. Because what they're selling is a commodity only in broad terms.

There exist also Natural Monopolies where it's essentially a Buyer's or Seller's Market. A classic example is a product that requires laying down underground cables to individual residences. It's simply not tolerable to have 37 different companies rooting around in the dirt all the time, so the "last mile" belongs to a chosen few.

Stuff like this is why auto-quacking that The Market Solves Everything makes one look like an idiot. There are so many exceptions even before the big mean government steps in. In fact, a true Free Market is a pretty rare (and often short-lived) bird.

Doesn't matter to me in the least

[paiute]

I get all my office supplies by stealing them from work.

Re:Great

[darkmeridian]

I am a small business owner, and I have to say that this is not the case. The Internet is the great equalizer. I can buy toner and paper online from NewEgg, Amazon, Costco, W.B. Mason, or Walmart. If Staples decided to jack up the prices, then I'd simply order somewhere else. I don't like splitting up my vendors, either. If I order toner and paper from one company, then I'm usually going to take my coffee and other stationery business somewhere else. The vendors all know this so they're always trying to use paper as a loss-leader to get your business on the other items.

Re:what?

[bws111]

Huh? They merged. The new company is called Office Depot. Office Max no longer exists. What is so hard to understand?

and thus a new wal mart is born

[nimbius]

Imagine of you will a 224,000 square foot shangri la of office. An entire area devoted to a sea of elderly men browsing ink jet printers, remarking on how great a deal theyre getting, and haggling the price of toner cartridges. their revalry interrupted twice daily by the passing of a thunderous freight-train of 13 year olds wheeling through the store on castered office seating. Imagine a copier the size of a two story house that still cant manage to fax correctly. In one long aisle, a veritable modern art museum of van goghs who have tested billions of different markers and pens in search for the one true biro. Picture a moutain of paper manned by khaki clad teenage sherpas who will guide the worthy to the perfect gloss of 8x11 in a 12 man expedition, using the bodies of the dead to guide their way. This new realm of office will succor a distant memory of office stores of yore with its array of overly lit fluorescent display stands and vallies of fake laptops and monitors perched upon particle board desks assembled by a small factory of hung-over college kids. and when at long last you think it can offer no more, this store will offer the most pointless of all selections of office treats and candies in 600 pound bulk tyvek totes that can conveniently be stacked onto any customers shopping fork truck. This office store will be visible for miles from the thick rolling smoke emenating from the innumerable propped doors featuring a staff of thousands competing in a veritable olympic competition of cigarette consumption as they all collectively 'burn one' while having told a customer they will search a 'back room' that does not exist for a product that cannot be sold.