Staples announced Wednesday it has agreed to acquire Office Depot in a stock transaction for $6.3 billion.
The deal would combine the nation’s two top office-supply retailers. Office Depot, based in Boca Raton, Florida, bought the No. 3 company, OfficeMax, in a $1.2 billion transaction in 2013.
Under the terms of the agreement, Office Depot shareholders would receive, for each Office Depot share, $7.25 in cash and 0.2188 of a share in Staples stock at closing. The companies said the price was based on Staples’ closing share price on Feb. 2, the last trading day prior to initial speculation around a possible transaction. The deal values Office Depot at $11 a share.
Staples said it would retain its headquarters in Framingham, Mass., and “evaluate maintaining a presence in Boca Raton.”
Staples began discussions to acquire Office Depot in September. The agreement has been unanimously approved by each company’s board of directors. With the acquisition of Office Depot, Staples said it would have annual sales of about $39 billion.
“This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment,” said Ron Sargent, Staples’ chairman and CEO. He said the combined companies should have cost savings of at least $1 billion, as it reduces global expenses.
Both companies have been closing stores in recent years, particularly as Office Depot has been integrating the OfficeMax chain.
He said the savings will “accelerate our strategic reinvention, which is focused on driving growth in our delivery businesses and in categories beyond office supplies.”
Office Depot Chairman and CEO Roland Smith, who was appointed shortly after Office Depot merged with OfficeMax, said the transaction “delivers great value for our shareholders and creates a company ideally positioned to serve our customers and grow over the long term.”
The deal is subject to antitrust regulatory approval and Office Depot shareholder approval. Staples will pay a $250 million termination fee to Office Depot if the agreement is terminated because of antitrust requirements.
The companies said they expect the transaction to close by year-end.
On Wednesday, Staples shares dropped 12 percent to $16.73, and Office Depot shares gained 2.2 percent to $9.48.