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 user 2008-05-21 at 2:57:45 pm Views: 28
  • #20062

    Corp Express fights Staples bid with French buy
    May  2008 PARIS/AMSTERDAM, – Dutch office supplier Corporate Express 
    is seeking to buy French rival Lyreco for 1.4 billion euros ($2.2
    billion) in cash and equity, as it fends off a hostile bid from U.S.
    rival Staples Inc.Including a vendor loan to Lyreco, the deal’s
    enterprise value is 1.73 billion euros, the companies said in a
    statement.Corporate Express is paying Lyreco shareholders with 102.5
    million of newly issued shares or 29.9 percent of its total outstanding
    capital, as well as 560 million euros in cash.

    Corporate Express
    shares fell almost 9 percent and traded down 4.4 percent to 7.75 euros
    by 0837 GMT.”There is a risk that Staples will withdraw its offer of 8
    euros per share, pushing shares down,” said Theodoor Gilissen analyst
    Johan van den Hooven, adding that there was still a chance that Staples
    might raise its offer to lure investors.The Lyreco deal, of which
    Reuters had earlier on Wednesday obtained details, would make Corporate
    Express less sensitive to the U.S. economy, where it has seen shrinking
    sales in 2007 and rival Office Depot  has warned of weakening economic
    conditions.The combined company would better weather weaker economic
    conditions and demand, said Lyreco Chief Executive Eric Bigeard.
    “Volume and size helps in this business,” he told reporters.

    formally launched its 1.5 billion euro unsolicited bid for Corporate
    Express on Monday, which the company rejected as too low. Investors can
    tender their shares until June 27.Corporate Express said it would seek
    shareholders’ approval for the deal at an extraordinary meeting in the
    second half of June, making it likely that shareholders will have to
    choose between selling to Staples or approving the Lyreco
    merger.Analysts said the Lyreco deal would benefit Corporate Express
    but interpreted it as a defensive move to fend of Staples’ bid.At the
    same time, they said it was difficult to guess how shareholders would
    choose between a certain cash bid and uncertain growth prospects.They
    added that the deal was not cheap, since Corporate Express was valuing
    Lyreco at about 10 ten times operating profit, while the rest of the
    industry trades at around 7.5.”It remains to be seen whether it will
    get shareholders approval for the deal,” said Fortis analyst Maarten
    Bakker. “I have doubts about this.”

    The deal
    will create Europe’s biggest supplier of office products to businesses
    with 7.8 billion euros in combined sales, the companies said.Lyreco’s
    Bigeard will become CEO of the combined group, while Corporate Express
    CEO Peter Ventress will become Chief Operating Officer.The deal will
    add to earnings from 2009, and Corporate Express lifted its guidance
    for 2008, to combined sales of between 8 billion and 8.2 billion euros.
    Staples had 2007 sales of $19.4 billion.Corporate Express’s Ventress
    said that talks on the deal began in early 2008 and that the company
    “absolutely would have done the deal without the Staples bid”.”The two
    companies have spoken on many occasions in the past few years,”
    Ventress told reporters on a conference call.Lyreco’s board and its
    shareholders supported the acquisition and the combined group.Corporate
    Express reiterated on Monday that Staples’ offer at 8 euros per share
    was too low and Staples said it launched an offer because the Dutch
    firm was unwilling to negotiate.