Sycamore Partners completed its $6.9 billion acquisition of Staples Inc. yesterday and the office supplies company now begins its separation into business-to-business and retail entities under its new owners.
In its run-up to the Sycamore Partners acquisition, Staples said it would separate from its retail chain and operate primarily as a seller of office supplies and other products to businesses, according to a financial statement filed August 10 in relation to its pending acquisition by the investment firm.
Staples said in the 8-K filing with the U.S. Securities and Exchange Commission that its U.S. and Canadian retail businesses—including about 1,230 stores in the U.S. and 300 stores plus the e-commerce site Staples.ca in Canada—will operate as “independently managed and capitalized” Sycamore-affiliated entities once the acquisition is completed. “The remaining business within Staples will consist solely of the NAD business,” Staples said in the filing. NAD, or North American Delivery, includes the flagship Staples.com, which sells to small businesses and consumers, and StaplesAdvantage.com and Quill.com, which sell to larger businesses.
“We look forward to benefitting from Sycamore Partners’ retail and wholesale experience as we work together to deliver exceptional products, services and expertise that enable businesses to work better,” Staples Inc. CEO Shira Goodman said in a statement yesterday.
The plan to separate Staples’ B2B operations from its retail businesses coincides with statements the office supplies company has made in the past year. Goodman has referred to the Staples Business Advantage unit as the “growth engine of our company.” In addition, Staples has been expanding beyond its traditional line of office supplies like paper and ink to include office furniture, janitorial and work-safety supplies, breakroom products, promotional items imprinted with business customers’ logos, and a wider range office technology products and related services.
Staples.com caters to businesses with fewer than 10 employees through a program it calls Business Rewards Plus, which includes “business-exclusive pricing on thousands of items” and next-day delivery of certain orders valued at more than $25. Staples.com also allows customers to pick up online orders in Staples stores, but a spokesman says it’s too soon to say how such a service would work after the planned separation.
Larger businesses that place orders through Quill.com and StaplesAdvantage.com can get such things as customized pricing and account management services. StaplesAdvantage customers can also opt to pick up some small online orders at Staples stores, but few do, the spokesman says. “We do offer that, but haven’t seen a ton of demand for it,” he says.
Staples is No. 22 in the B2B E-Commerce 300.
The Sycamore deal caps more than a year of turmoil for Staples, which was thwarted in an attempt to make its own acquisition in May 2016. The company tried to buy Office Depot Inc. (No. 42) for $6.3 billion to unify the two largest office-supply sellers, but aborted that effort after the transaction was opposed by antitrust regulators.
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