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 user 2008-02-19 at 12:02:00 pm Views: 100
  • #21281

    Corporate Express Rejects Staples’ Bid

    BOSTON — Corporate Express NV on Tuesday swiftly rejected an
    unsolicited buyout offer from Staples Inc., saying the office products
    supplier’s $3.67 billion bid was too low.

    Staples, the world’s
    largest office products supplier, disclosed Tuesday it had offered to
    pay a hefty premium in an all-cash bid for Corporate Express.”Corporate
    Express is of the opinion that this proposal significantly undervalues
    the company and fails to reflect Corporate Express’ prospects,” the
    Netherlands-based office supplies delivery firm said in a news release,
    about two hours after Staples announced its bid.

    Express said the offer was not in its shareholders’ best interests.”We
    therefore reject this proposal and reiterate our commitment to pursuing
    our declared strategy,” the company said.Staples’s offer for Corporate
    Express came after it made repeated attempts in recent months to
    discuss a deal.”We
    have been disappointed that you have not been willing to do so,”
    Staples Chairman and Chief Executive, Ronald Sargent, said in a text of
    a letter to Corporate Express’ CEO and board.

    Framingham, Mass.-based Staples said it would pay 7.25 euros — equal to $10.63 — per share for Corporate Express.Staples
    said that amount represents a 67 percent premium to Corporate Express’s
    closing share price on Feb. 4, before rumors of an offer started
    circulating. When measured against Corporate Express’s closing price on
    Monday in European trading, the offer represents a premium of about 33

    Corporate Express’ U.S. shares rose $3.17 to $11.26 in
    morning trading Tuesday. Shares of Staples fell 18 cents, or 1 percent,
    to $21.86.Staples said its cash offer gives Corporate Express a
    chance to move quickly after the Dutch company announced “strategic
    reorientation” plans following a recent decline in its stock price,
    which briefly rose above $15 a share on the New York Stock Exchange in
    July.Staples said its offer “would result in superior benefits
    for Corporate Express’ stakeholders, and that such benefits can be
    achieved more completely and quickly than under your strategic
    reorientation plans, and with a higher degree of certainty.”

    delivery business has consistently posted stronger growth than its
    retail operations in recent years, with economic concerns in the U.S.
    recently weighing on retail growth.A purchase of Corporate
    Express “is an opportunity to gain scale in the fastest-growing, most
    profitable part of the office supplies business,” said Anthony
    Chukumba, an analyst with FTN Midwest Securities. “There would be
    massive opportunities for Staples to have cost synergies by paring back
    Corporate Express’ sales force, as well as revenue synergies, by
    selling customers more services than they’re buying right now.”

    Express was known as Buhrmann NV until last spring, when it changed its
    trading name to that of its most well-known brand, the Colorado-based
    corporation it acquired in 1999.Corporate Express has contract
    operations in 20 countries, with total sales of $8 billion in 2006.
    About half those sales came in the U.S. and Canada, and about half the
    company’s 18,000 employees are in the U.S.Staples, a 22-year-old
    firm with about 74,000 employees, had 2006 sales of $18.2 billion. The
    company has more than 2,000 retail stores in 22 countries in North and
    South America, Europe and Asia.

    Staples makes €2.5 billion bid for CE

    2008 – Framingham (MA), USA After weeks of speculation, Staples has
    made a bid to acquire Corporate Express for €2.5 billion.

    proposal values Corporate Express shares at €7.25 each, representing a
    premium of approximately 67 percent to Corporate Express’ 4 February
    2008 closing share price, the last day before rumours of a potential
    sale circulated in the market.

    CE immediately issued a statement
    rejecting the proposal, saying “this proposal significantly undervalues
    the company and fails to reflect Corporate Express’ prospects. We do
    not believe the proposal is in the best interests of our shareholders
    and other stakeholders. We therefore reject this proposal and reiterate
    our commitment to pursuing our declared strategy”.The move comes after
    weeks of “will they, won’t they?” speculation, following CEs
    much-publicised troubles, especially with its US operations.

    seemed that CE was turning the corner after posting
    better-than-expected quarterly results last week as new CEO Peter
    Ventress embarked on a turnaround plan, but Staples has taken the
    unprecedented step of making public a letter that it has sent to
    Ventress, seemingly to provoke an official response from him and the
    company’s shareholders.After being contacted by OPI, Staples’ EVP
    Contract Jay Baitler declined to comment on the news, while we were not
    able to reach Peter Ventress.Following is the text of the letter that
    Staples has sent to Peter Ventress:

    Dear Mr. Ventress:
    are writing to you, on behalf of the Board of Directors of Staples,
    Inc., to outline the terms on which Staples proposes to acquire the
    entire outstanding share capital of Corporate Express NV (“Corporate
    Express”). Over the last several months, we have made repeated attempts
    to engage in discussions with you concerning a business combination,
    and we have been disappointed that you have not been willing to do so.
    We believe strongly that a combination between Staples and Corporate
    Express will offer significant and certain value to Corporate Express’
    shareholders and other stakeholders and will greatly enhance our
    ability to serve customers throughout the world. We are writing this
    letter to demonstrate both our enthusiasm for the proposed transaction
    and our commitment to pursue a combination with Corporate Express.

    we understand you have recently announced your strategic reorientation
    plans, we believe that a business combination with Staples at this time
    would result in superior benefits for Corporate Express’ stakeholders,
    and that such benefits can be achieved more completely and quickly than
    under your strategic reorientation plans, and with a higher degree of
    certainty. A business combination with us now creates certain cash
    value for Corporate Express’ shareholders and eliminates the risks
    associated with both the achievement of your plan and today’s volatile
    business and market environment. We believe that our proposal is
    superior to any other alternative available to Corporate Express and
    its stakeholders.

    Subject to customary conditions outlined in
    this letter and based on our review of publicly available information
    relating to Corporate Express, we are prepared to make an offer of EUR
    7.25 per ordinary share of Corporate Express. In the event that prior
    to the closing, any dividends or other distributions are declared in
    respect of Corporate Express’ ordinary shares the offer price will be
    decreased by an amount per ordinary share equivalent to any such
    dividend or distribution per ordinary share. Our proposed price implies:

    a premium of approximately 67% to Corporate Express’ closing share
    price of EUR 4.32 on February 4, 2008, the last day before rumors of a
    potential offer for Corporate Express circulated in the market,

    - a premium of approximately 33% to Corporate Express’ closing share price on February 18, 2008, and

    a premium of approximately 60% to Corporate Express’ average closing
    price during the 1-month period ended on February 18, 2008, and a
    premium of approximately 43% to Corporate Express’ average closing
    price during the 3-month period then ended.

    We are committed to
    pursuing our proposal because of the significant opportunities that it
    will create for Staples as well as for all stakeholders of Corporate
    Express. Our proposal is based on the following key elements:

    Valuation: As shown above, we are valuing Corporate Express at a
    substantial premium to the trading price both before and after the
    emergence of rumors that we intended to make an offer for Corporate
    Express on February 4, 2008.

    All Cash Offer: Our proposal is to
    acquire all of the outstanding shares in Corporate Express for cash. In
    addition to the proposal to acquire Corporate Express’ ordinary shares,
    we are also investigating the possibility of making an offer for the
    listed outstanding depositary receipts of preference A shares.

    Financing Condition: Our proposal is not subject tofinancing. We have
    entered into a bridge loan commitment letter with Lehman Brothers on
    customary terms and conditions.We have no reason to believe that the
    customary conditions toclosing will not be satisfied. This committed
    financing together with our available cash will be more than sufficient
    to finance the entire acquisition.

    Ready to proceed: Due to the
    complementary nature of Corporate Express and our business and based on
    the work we and our advisers have already performed and the resources
    we have committed, we are in a position to proceed with the proposed
    combination on an expeditious basis.

    Attractive Long-Term
    Solution for all Stakeholders: Under the proposed transaction,
    Corporate Express can focus on long-term value creation within a large
    and diverse organization. We believe that the management and employees
    of Corporate Express are important to both the integration of our
    businesses and the achievement of future success. We plan to continue
    to invest in the people at Corporate Express and therefore anticipate
    that there will be attractive career opportunities for employees of
    Corporate Express at the combined company. Customers will benefit as
    the combined company will have an improved geographical reach and will
    be able to offer an expanded range of products and services to

    We have a high regard for Corporate Express’
    management team and believe that the management talent resident in our
    respective companies will enable the combined company to enhance value
    for the stakeholders of the combined company. We are looking forward to
    discussing with you the best way to combine Corporate Express’ and our
    management talent to successfully lead the combined company.

    are prepared to meet with you and your management team at your earliest
    convenience to commence discussions regarding our non-binding proposal
    for a business combination. We need to conduct only limited
    confirmatory due diligence and will commit the resources needed to be
    able to enter into a definitive acquisition agreement (or merger
    protocol) expeditiously.

    In view of the significance of this
    proposal to your shareholders and ours, as well as our desire to avoid
    selective disclosures, we plan to release publicly the text of this

    We believe our proposal represents a compelling
    opportunity to create significant value for all your stakeholders. It
    is our hope that you will find our proposal to be attractive and that
    we can sit down together very quickly to discuss how we best move
    forward toward the closing of a transaction. It is of course our
    preference that both your executive and supervisory boards support our
    proposal. Because we believe the proposed transaction offers
    substantial value to stakeholders of both our companies as outlined
    above, we are committed to undertaking the necessary steps to seeing
    this transaction to completion.

    I look forward to discussing this with you.
    Very truly yours,
    Ronald L. Sargent
    Chairman and Chief Executive Officer