100 Uk Staples Stores At Risk Of Shut Down, As Rescue Deal Nears. By Ben Marlow.
The future of more than 100 UK stores belonging to American office stationery giant Staples have been thrown into doubt despite talks to offload its European operations to one of Wall Street’s most powerful hedge funds.
Investment firm Cerberus is in negotiations about a rescue deal to take on the shops Staples owns across Europe, The Daily Telegraph has learned. The takeover, for a nominal sum, is expected to include the company’s UK high street sites, but there are questions over whether New York-based Cerberus will keep the struggling stores open.
According to its most recent accounts, Staples’ UK retail operations posted £4.2m of losses on £220m of sales in the year to the end of January 2015. However, it also owns an online arm and a business-to-business division in the UK, both of which are profitable and seen as having a more viable future that the shops.
A senior source said: “They will assess the competitiveness of every part of the business but it is fair to say that some areas are more promising than others.”
Staples is beating a retreat in a desperate bid to slash costs after competition authorities blocked an ambitious $6bn (£4.9bn) mega-merger with rival Office Depot earlier this year. It owns just over 200 shops in 16 countries on the continent and wants to reduce overheads by around $300m.
KPMG was appointed to review the future of the European business earlier this year, fuelling speculation that Staples could either pull the plug on the business or decide to implement a severe financial restructuring that would result in its presence being dramatically scaled back.
The office supplies market is struggling to adjust to the digital age after years of decline.
However, it is understood that Cerberus thinks there are opportunities to provide new products and services to existing customers.
New York-based Cerberus has more than $40bn under management, which it puts largely into troubled companies.
It has had mixed success in the UK. The firm had a disastrous spell as owners of high street chain Focus DIY, which collapsed into administration in 2011, triggering losses of nearly £200m.
However, it is better known for hoovering up billions of UK and Irish bank assets in the aftermath of the financial crisis, including £13bn of Northern Rock mortgages. Some £6bn of those were sold on last month.
The firm also snapped up a £4.5bn loan book from Nama, Ireland’s “bad bank” in 2014.
The fund has also been named as a likely bidder, along with Blackstone, for a £17bn loan book that was part of mortgage lender Bradford & Bingley before it was bailed out in 2008 at the height of the crisis.