*NEWS*CORP-EXPRESS FIGHTS STAPLES-CORP HOSTILE TAKEOVER

[Anonymous]

http://www.reuters.com/article/companyNews/idUSN2035459920080521
Corp Express fights Staples bid with French buy
Wed
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.

Staples
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.”

EUROPE’S BIGGEST
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.

[Author]

May 21, 2008 at 2:57 PM