Staples agrees to buy Corporate Express for $2.6 b

Staples Inc., the Framingham office supplies retailer, announced early this morning that it has agreed to buy Corporate Express NV for roughly $2.6 billion.

Over the past few months, Staples made three bids for the Dutch company, with an initial bid of $2 billion; Corporate Express had rebuffed earlier bids as too low.

After Staples again lifted its offer price, Corporate Express signalled its willingness to enter negotiations last week.

Corporate Express has a strong presence in the business of contract deliveries of office supplies to large corporate customers, an area in which Staples wants to expand.

Staples may be best known for its roughly 1,775 stores in North America. But in reporting quarterly results last month, the company noted that while total company sales were up, sales at North American stores open at least a year, a key measure of a retailer's performance, decreased 6 percent.

Its North American delivery business to small and mid-size companies, in contrast, reported a sales increase for the quarter of 8 percent, Staples said.

In its release this morning, Staples said: "This acquisition establishes Staples as the world’s premier provider of office products to businesses of all sizes."

Staples also said the the combination of Staples and Corporate Express will establish "a contract business for Staples in Europe and Canada, while fueling Staples’ North American Delivery business in the US, which is currently Staples’ fastest growing and most profitable business unit. The combination will also extend Staples’ geographic reach to Australia and New Zealand."

In a note to investors this morning, Credit Suisse analyst Gary Balter wrote, "We see at least $250 million in synergies over three years."

In his note, Balter sometimes used stock symbols - SPLS for Staples and ODP for rival Office Depot Inc. of Florida.

Balter wrote: "With the acquisition of Corporate Express, Staples will dwarf other office-supply distributors with a combined $27 billion (in annual revenue) in SPLS compared to the next largest player, ODP, with $16 billion. The acquistion will move Staples to a leadership position in the contract (large company) segment in North America and will create a solid base on which to build its global footprint with a number two position in Europe and a number one position in Asia-Pacific."

According to the Globe 100 survey, Staples had 2007 revenue of $19.37 billion.

Last month, in a move apparently designed to keep Staples at bay, Corporate Express made an offer to buy Lyreco SAS of France for $2.7 billion.

In its press release today, Staples said that Corporate Express has terminated its merger agreement with Lyreco.

When the sale is completed, Staples added that Corporate Express chief executive Peter Ventress will become president of Staples International, a new position that will oversee Staples' business outside the United States and Canada.

In late morning trading on the Nasdaq Stock Market, Staples shares were up 95 cents, or 4.1 percent, to $24.10.

For additional coverage of how hostile bids from Staples ultimately resolved themselves into today's sales agreement, please click here.
(By Chris Reidy, Globe staff)