Corp. Express Fights Staples Bid with French Buy
Corporate Express, a Dutch office supplier fighting off a hostile bid from U.S. rival Staples, has agreed to buy French rival Lyreco for 1.39 billion euros ($2.16 billion) in cash and equity.
Including a vendor loan to Lyreco, the deal's enterprise value is 1.73 billion euros.
Corporate Express is paying Lyreco shareholders with 102.5 million of newly issued shares or 29.9 percent of Corporate Express' total outstanding capital, and 560 million euros in cash.
Corporate Express shares fell 1.5 percent to 7.99 euros.
The deal, outlined earlier on Wednesday to Reuters by a source familiar with details, is the latest move in the consolidating office goods supplier market.
Staples formally launched its 1.5 billion euro unsolicited bid for Corporate Express on Monday, which the company rejected.
Shareholders have until June 27 to tender their shares.
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.
The deal will create Europe's biggest supplier of office products to businesses with 7.8 billion euros in combined sales, the companies said in a statement.
Lyreco Chief Executive Eric 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.
Bigeard said the deal would help the combined company better weather weaker economic conditions and demand.
"Volume and size helps in this business," he said.
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 a hostile offer because the Dutch firm was unwilling to negotiate.