*NEWS*IS STAPLES CORP CLOSING IN ON CORPORATE EXPRESS ?

[Anonymous]

http://www.reuters.com/article/mergersNews/idUSN1334453320080513
Staples closes in on Corporate Express
May
2008 NEW YORK/AMSTERDAM – Corporate Express  on Tuesday rejected a
sweetened offer from U.S. office supplies retailer Staples Inc as still
significantly undervaluing the company, but said it was willing to
talk.Staples raised its all-cash offer by more than 10 percent to 8
euros per share from 7.25 euros, but Corporate Express said in a later
statement it ignored the value of the company and denied its
shareholders any share in the synergies that a combination with Staples
would yield.”These synergies would be significant. At the price level
currently indicated by Staples consequently, all synergies would be for
the benefit of the Staples shareholders and none for the benefit of our
shareholders,” Corporate Express said in an open letter to
Staples.”However, we are happy to discuss our views and your views in
more detail,” added the Dutch firm which sells products such as
stationery and furniture directly to companies.

Staples shares
closed up more than 2 percent in New York trading late on Tuesday,
while Corporate Express shares ended up 6.2 percent, at 8.08 euros.The
new offer values Corporate Express at about 1.46 billion euros ($2.3
billion). Including debt, it is worth about 2.6 billion euros. Staples
has secured a $3 billion credit line for the deal.Some analysts said
the offer might have to rise further, and shares in Corporate Express
touched a high of 8.15 euros.Analysts at SNS Securities estimated a
higher offer could be worth 8.40 euros per share, while Rabo Securities
analysts said it could be 9 euros. UBS analyst David Kerstens said it
was unlikely Staples would raise its bid.”We see synergies of about 2.5
euros per share. Based on a stand-alone value of Corporate Express of
5.5 euros, this gives a bid value of around 8 euros.”A tie-up between a
retailer and wholesaler of office supplies would make strategic sense
and could lead to big savings at a time when both companies are seeking
to combat a downturn in the U.S. economy, analysts have said.Staples
gets more than half of it sales, totaling $19.4 billion in 2007,
through its retail outlets and operates more than 2,000 stores
worldwide, but its business-to-business operations are more
profitable.”This is where most synergy benefits are possible,” Kerstens
said.

Corporate Express had 5.6 billion euros of sales in 2007.
Before
the Dutch firm made its statement, Staples said its attempt to hold
talks with the company, as recently as last Friday, had failed after
the board refused to negotiate.”Given the unwillingness of Corporate
Express to negotiate a transaction, we will make our offer directly to
shareholders,” Staples Chief Executive Ron Sargent said in a
statement.”We are offering certain cash values versus the considerable
uncertainties of management’s long-range guidance,” he added.Corporate
Express trades at about 15 times projected 2008 earnings versus a
price-earnings ratio of about 14 for Staples and 12.6 for U.S. rival
Office Depot Inc

SHAREHOLDER PRESSURE
Staples said it has
made significant progress in preparing for the offer — it has obtained
U.S. antitrust clearance, met with Dutch trade unions and submitted a
request for approval with the Dutch market regulator AFM.The company
said it expected to launch a formal offer after it receives approval
from the AFM and to make its offer unconditional if at least 75 percent
of shares were tendered.Some Corporate Express shareholders may go to
court to force its management to negotiate with Staples if it continues
to refuse to talk to Staples, Dutch daily Het Financieele Dagblad
reported on Tuesday before the increased offer was announced.Corporate
Express has fought off pressure to sell itself from hedge fund
investors, installing new management last year who pledged to revive
sales while keeping the firm independent.The stock lost more than half
its value during 2007 as U.S. sales slumped. It touched a five-year low
of 3.18 euros in January but has more than doubled since then on the
bid and as it fought back in the United States, where it generates
around 50 percent of sales.The company reported operating profit of
50.5 million euros last week and the shares rose as Corporate Express
confirmed its ambitious sales growth and margins targets.

[Author]

May 16, 2008 at 12:42 PM