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AnonymousInactiveStaples to buy Corporate Express for $2.7B
U.S.
office supplies company Staples has won its battle to buy Corporate
Express after the Dutch firm agreed to a sweetened bid of 1.7 billion
euros ($2.65 billion) to create the world’s biggest office products
supplier.Staples said on Wednesday it was raising its all-cash offer to
9.25 euros per share from the 9.15 euros it announced last week and
compared to the 7.25 euros it offered in February.Corporate
Express said in a statement it had ended a plan to buy privately owned
French rival Lyreco, which was seen as an attempt to fend off
Staples.Corporate Express shares were 1.4 percent higher at 9.20 euros
by 1138 GMT, outperforming a 0.4 percent rise in the blue-chip index
and almost triple the five-year low of 3.18 euros it touched in January
before the bid battle began.”We believe this means the bid by Staples
will be successful and that Corporate Express will disappear from the
Dutch market,” Rabo Securities wrote in a note to clients.Analysts said
a tie-up between a retailer and a wholesaler of office supplies would
make strategic sense and could lead to big savings as both face a
slowing U.S. economy, where rivals like Office Depot have warned of
weakness.”Corporate Express is simply being realistic, they did what
they had to do. I think it is more than fair value for Corporate
Express,” said Petercam analyst Fernand de Boer.Corporate
Express will pay a 30 million euro break-up fee to Lyreco, which said
last week it had considered a counterbid for Corporate Express but
market conditions were not favorable.Lyreco Chief Executive Eric
Bigeard told Reuters his firm would now review its options on expanding
in North America and consider acquisitions in Europe and the
Asia-Pacific region.Staples said the firms had combined annual revenues
of $27 billion with more than 94,000 employees in 28 countries.Savings
are likely to be in the United States where the companies have
overlapping operations and could come to 60 million euros in three
years, said Petercam’s de Boer, but the companies said they did not
expect any major job losses.Corporate Express said its boards
unanimously recommended the offer, which expires on June 27 at 1530
GMT. It said it would still hold a shareholders meeting on June 18, but
there would no longer be a vote on the proposed Lyreco deal.INVESTOR PRESSURE
While
Dutch regulations meant Staples could not raise its bid again after it
offered 9.15 euros last week, it bought about 1.1 percent of Corporate
Express shares at 9.25 euros each in an off-market transaction, meaning
it has to pay that for the rest.It said it now owns 13.4 percent of the
firm’s ordinary shares and holders of about 23.3 percent of the Dutch
company have already committed to accept Staples’ offer, which it will
declare unconditional if it gets 51 percent of shares.Staples said the
deal gave Corporate Express an enterprise value of about 3.1 billion
euros, including about 1.7 billion euros in equity with 182.9 million
ordinary shares outstanding.Later in the day Staples said it was
increasing its offer for all Corporate Express’ convertible bonds to
1,346.71 euros per bond from the 1,332.15 euros offered
previously.Corporate Express Chief Executive Peter Ventress will take a
new position as president of Staples International to oversee business
outside of North America and play a key role in managing the
integration of the two firms.Staples said it expected
settlement of the offer in July and that it had sufficient funding for
the deal.The Staples deal comes after activist investors put pressure
on Corporate Express due to poor performance in the United States,
where it generates around 50 percent of sales.It is just the latest in
a slew of Dutch companies to be bought by a foreign rival, including
bank ABN AMRO, electrical goods supplier Hagemeyer and food company
Numico. Few government barriers to takeovers and a liberal Dutch
corporate governance code have made them desirable targets.Corporate
Express trades at 16 times estimated 2008 earnings, compared with
Staples at 15.5 times and Office Depot at 12.3 times, according to
Reuters data.Lehman Brothers Holdings Inc is providing Staples with
financial advice; Clifford Chance LLP and WilmerHale LLP are providing
legal and tax advice; and Weil Gotshal & Manges LLP is providing
antitrust advice.http://news.yahoo.com/s/nm/20080611/bs_nm/corporateexpress_dc;_ylt=At07CHu2.q2qKwzLyrtAVrSyBhIF
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AuthorJune 12, 2008 at 10:43 AM
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