Staples Inc. has finally won over Essendant Inc., a top-tier multibillion-dollar and multichannel distributor that it has been courting for months in a competition with General Parts Co.
Essendant is a Deerfield, Ill.-based supplier of office and industrial products to thousands of distributors and resellers, including many that it helps sell through their own B2B e-commerce portals. It said Monday that Staples—itself a major online and offline supplier of office products—had made a “superior proposal” to acquire it at $12.80 per share, up 11% from its prior offer of $11.30. The cash-for-stock deal is valued at about $480 million, plus the assumption of debt.
Essendant said Monday it also was informing General Parts that it “intends to terminate” this week its April 2018 agreement to merge with GPC business S.P. Richards, a distributor of office products that operates a dealer portal at SPRdealerservices.com. Under that deal, Essendant and S.P. Richards had planned to operate as a single company under the Essendant name, with expected annual sales of about $7 billion. In 2017, Essendant reported sales of $5 billion; S.P. Richards, $2 billion.
They also said the merger was expected to result in annual savings of about $75 million in “cost synergies.”
GPC said in a statement this week that it would not make a counter offer. Upon termination of its merger agreement with Essendant as is expected this week, GPC requires Essendant to pay a $12 million termination fee, GPC said.
Staples, which is owned by investment firm Sycamore Partners, initially made an unsolicited offer on April 17, 2018—five days after Essendant and GPC announced the planned merger with S.P. Richards—to acquire Essendant for $11.50 per share. It also asserted that its proposal would bring more value to Essendant over the long term compared with the GPC agreement.
But the Essendant board continued to favor the GPC deal, until Staples upped its offer to $12.80 per share. Sycamore already owns about 10% of Essendant.
Essendant also operates several of its own online B2B businesses, including e-commerce portals for Medo Corp. for industrial tools and equipment, Alco Tool & Supply for the automotive industry and petroleum industry supplier ORS Nasco.
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