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Staples/Office Depot Scuttled Merger Controversy

"A federal judge on Tuesday blocked the planned merger of rivals Staples Inc. and Office Depot Inc. because of antitrust concerns, prompting the office-supply companies to say they would abandon the roughly $6 billion deal. U.S. District Judge Emmet G. Sullivan sided with the Federal Trade Commission, which in a December lawsuit alleged the combination of the office superstores would lead to higher prices for large corporations that buy office supplies in bulk." as reported by the CFO Journal (WSJ).

Do you agree with the Judge and FTC?

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Activist investors (Starboard) are the ones pushing for this deal. I have a not so good perspective of activist investors.

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

Perhaps it is because I don't fully understand what the U.S. District Judge meant, but if "the office superstores" combined and raised prices for corporations "buying office supplies in bulk," wouldn't that eventually lead to those companies going elsewhere for office supplies?

Are these two really the only "games in town"?

Even though it doesn't appear through a quick search that there are many other office supply companies, I have to think with technology today someone in the marketplace would come up with a plan to tackle the big corporations.

David Smith
Title: Manager
Company: Private
(Manager, Private) |

Chris, you are so right. For instance, I think Amazon can probably offer a smidgen of competition. Then there's a little company out of Bentonville Arkansas that has some buying power and known for passing along savings to customers. Then, there's Costco and Sam's Club, not to mention more online options like Overstock and Uline.

And then, what's with this judge's worry over large corporations (specifically) having to pay higher prices? If that's true, then you'd have to figure small companies are really going to get gouged, but no mention of them?

Somehow, I don't think Exxon would be overpaying for copy paper. They could always call Dunder-Mifflin, the real company - not it's TV namesake.

Ross Anderson, CPA, MBA
Title: Controller
Company: TFS Capital
(Controller, TFS Capital) |

I agree with the judge. Sure there are other outlets, but Staples and Office Depot are two pretty big players that focus on just office supplies. They would pretty much control the brick-and-mortar part of the business, especially since they can fit their stores in smaller retail spaces that other companies such as Walmart cannot.

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