Dutch office supplier rejects Staples again

Bid undervalues business, firm says

The acquisition of Dutch office supplier Corporate Express would make Staples a major player in Europe. (Adam Berry/Bloomberg News)

For the second time in nearly three months, struggling Corporate Express NV yesterday quickly rejected an increased takeover bid from rival Framingham office supplier Staples Inc., saying the new offer still significantly undervalues the Dutch company.

The rebuff came just hours after Staples upped the stakes for the hostile bid, offering 10 percent more than its initial all-cash proposal in February of $10.63 per share.

"The intended offer . . . still significantly undervalues the business of Corporate Express. At this price level, the offer completely ignores the ongoing operating value of the company," Corporate Express supervisory board chairman Frank Meysman and chief executive Peter Ventress wrote in a letter released yesterday to Staples chief executive Ron Sargent. "Furthermore, it ignores our strategic plan which provides a robust position to outperform our markets."

Staples spokesman Paul Capelli said the Framingham business has made "a serious offer that we believe represents a full and fair price for Corporate Express." He declined to comment on whether Staples would increase its bid a third time.

"Given the unwillingness of Corporate Express to negotiate a transaction, we will make our offer directly to shareholders," Sargent said in a statement issued yesterday before Corporate Express rejected the new offer, which values the company at more than $2.3 billion. "We are offering certain cash value versus the considerable uncertainties of management's long range guidance."

Staples said it has approached many of Corporate Express' large institutional shareholders and it has set a minimum acceptance of 75 percent of shares to assume control of the company.

The office supply chain is angling for Corporate Express to expand its most profitable and fastest-growing line of business, contract deliveries to corporate customers, according to analysts. The acquisition of Corporate Express, which reported a nearly 47 percent drop in first-quarter profit last week, would increase Staples' dominance in the US office supply delivery business and make it a major player in Europe.

Analysts say Corporate Express is under growing pressure to discuss the Staples offer. The latest bid represents a premium of roughly 51 percent over Corporate Express' closing share price on Feb. 18, the day before Staples unveiled its first proposal to acquire the Dutch firm.

"Corporate Express boards have so far refused invitations from Staples to discuss the offer, but we think this would become increasingly difficult given that some Corporate Express shareholders are apparently preparing legal steps to force Corporate Express management to enter into talks with Staples," UBS analysts David Kerstens and Mark van der Geest wrote in a report yesterday.

Corporate Express, in its letter to Sargent yesterday, said it is "happy to discuss our views and your views in more detail."

Shares of Staples stock rose 48 cents, or 2.2 percent, to close at $22.44 in trading yesterday.

Jenn Abelson can be reached at abelson@globe.com.