Deals and IPOs

Staples in 2.5 Billion Euro Offer For Corp. Express


U.S. office goods supplier Staples proposed a 7.25 euros per share cash offer for Dutch peer Corporate Express, valuing it at around 2.5 billion euros ($3.7 billion) and sending its shares soaring.


Analysts said the deal would bring cost synergies and boost Staples' market share in the United States where Corporate Express generates around 50 percent of its revenue.

Ending months of speculation about a possible bid, Staples said its offer represented a premium of around 67 percent to Corporate Express' closing price of Feb. 4, and it urged the Dutch firm's management to cooperate.

"From a strategic point of view they are a good fit but it significantly undervalues the company. They will probably have to raise to about 8 euros," said Fortis analyst Maarten Bakker.

Corporate Express, one of the world's largest office products wholesalers, has been under pressure from hedge funds to put itself up for sale after losses in the United States, its key market.

It was not immediately available to comment.

Its shares closed 39 percent higher Tuesday at 7.55 euros.

Corporate Express, which installed new management towards the end of last year, said earlier this month it had managed to reverse falling U.S. sales in the last quarter of 2007 and reiterated it wanted to continue as an independent firm.

"Staples has high regard for the Corporate Express management team, and believes together our combined companies will create significant opportunities for all stakeholders," said Ron Sargent, Staples chairman and chief executive.

In a letter to Corporate Express, Staples wrote: "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 that a business combination with Staples at this time would result in superior benefits for Corporate Express' stakeholders."

Corporate Express has traded at a discount to Staples, at 10 times projected 2008 earnings versus a price-earnings ratio of 15 for Staples and 10 for number two Office Depot Inc.

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