Staples Will Buy Corporate Express for $2.6 Billion

U.S. office supply retailers Staples' improved $2.65 billion bid for Corporate Express won the Dutch company's approval and the board will recommend it to the shareholders, Corporate Express CEO Peter Ventress told "Squawk Box Europe."

Staples raised its bid to an all-cash offer of 9.25 euros ($14.34) per share from a revised bid of 9.15 euros announced last week and compared with the 7.25 euros it offered in February.

"We believe it creates fair value for our shareholders and today we unanimously recommend that bid," Ventress said.

The merger will make Corporate Express part of the world's largest office supplier and would open up opportunities for growth both in mature and in emerging markets, he added.

A plan to acquire French rival Lyreco, seen largely as a way to fight back Staples' bid, was dropped although it "had a very clear and strategic rationale" at the time, Ventress said.

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 companies.

Staples said in a statement the firms had combined annual revenues of $27 billion with more than 94,000 employees.

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.

It said prior to entering into the agreement it had purchased about 1.1 percent of the outstanding shares for 9.25 euros.

In addition to offering 9.25 euros for its shares, Staples is also offering to buy Corporate Express' 2 percent subordinated convertible bonds due 2010 and has already acquired most of its outstanding 2014 and 2015 notes.

Staples said it expected settlement of the offer in July and that it had sufficient cash reserves and funds available under its existing revolving credit facility to fund the deal.

© 2008 CNBC.com