Staples, Inc. SPLS and Office Depot, Inc. ODP will have to wait till Dec 8, 2015 for the Federal Trade Commission’s (FTC) decision on their merger. Both the companies have agreed with the FTC to extend the review date for the merger. Following the news, shares of both Staples and Office Depot declined 1.5% yesterday.
The FTC was supposed to announce its decision on the pending merger by early this week. However, after the EU regulators openeda thorough investigation into the antitrust impact of the abovementioned merger the FTC is trying to be bit more cautious. The EU regulators have warned that the deal could eradicate important competition which will lead to price increases and less choice for customers.
In Feb 2015, Staples had announced that it will acquire rival Office Depot in a multi-billion dollar deal. Last month, both Staples and Office Depot furnished additional documents and information to the FTC, complying with the commission’s “second request." Both the companies agreed to “substantial compliance” and provided information regarding Staples’ $6.3 billion buyout of Office Depot. The companies continue to work in tandem with the Fed regulators.
The two companies would create a retail chain with approximately $39 billion in revenues and thousands of stores. We note that this idea is not a new one as the same was proposed 18 years ago but was dismissed by the FTC at that time, after being slammed as anticompetitive.
Zacks Rank
Currently, both Staples and Office Depot carry a Zacks Rank #3 (Hold). Some better-ranked stocks in the retail sector include ULTA Salon, Cosmetics & Fragrance, Inc. ULTA and Dick's Sporting Goods Inc. DKS. Both the companies have a Zacks Rank #2 (Buy).
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