Essendant CEO Ric Phillip says the top-tier distributor of business and industrial products is “well positioned” to close on its pending acquisition by Staples—but final approval is delayed by the government shutdown.

When Essendant Inc. and Staples Inc. agreed last September to combine under Staples’s offer to pay close to $1 billion for Essendant, their announcement forecast a completed deal in the fourth quarter of 2018. For the two multibillion-dollar suppliers of office supplies and other products to businesses, the deal was made on the promise of major cost-saving efficiencies.

But the deal also raised concerns among Essendant’s client dealers and resellers that Staples could unfairly intrude on their business—and the pending acquisition is still under review by the Federal Trade Commission. And with the FTC’s operations on hold because of the government shutdown, there’s no clear timing for a completed Essendant Staples deal.

The initial expected closing date, however, has been delayed since before the shutdown started last month. For ten consecutive weeks since early November, Staples and Essendant have issued a combined statement, filed each week with the SEC, to extend Staples’s tender offer to acquire all of Essendant’s outstanding shares. The last statement, issued on Jan. 10, extended the offer until 6 p.m. Eastern time on Jan. 16. The statements haven’t clarified the need for the extension, but they coincide with the pending nature of the FTC review.

Among matters the FTC may be addressing are Essendant’s customers’ concerns—recognized by both Essendant president and CEO Ric Phillips and Staples CEO Sandy Douglas—that Staples has long been a big competitor that could gain inside information about Essendant’s thousands of dealer and reseller clients and take business away from them.

Nonetheless, Phillips predicted this week that a final completion of the acquisition will come in the first quarter of this year. On Tuesday, he sent a letter to Essendant’s customers suggesting that the Staples deal will get back on a fast track toward completion once the shutdown ends.


“We remain well positioned to close the transaction and believe we will do so in early Q1 of 2019, subject to final approval from the FTC,” he said in the letter, which was filed with the SEC. But he added: “However, our final approval has been delayed by the recent government shutdown, which has impacted the work of the FTC and timing of a number of pending approvals, including, unfortunately, ours.”

Phillips and Douglas have made assurances that, other than sharing supply chain services to gain more efficiency in purchasing products, Essendant and Staples will maintain separate commercial operations and install a “firewall” to protect the sales data of Essendant’s dealers and resellers and prevent Staples from using that data to help Staples-branded operations. “I recognize it may be tough for [Essendant’s] dealers to see themselves working with a company owned by Staples, who they have long viewed as a big, arrogant competitor. For example, some may be worried about Staples leveraging their customer data in competition with them,” Douglas said in a letter to Phillips last fall filed with the SEC.

But Douglas—who joined Staples from The Coca-Cola Co., where as executive vice president he worked with Coke’s network of bottlers and distributors—said that following the acquisition Staples will install “a strong, externally monitored firewall to preserve the integrity of Essendant dealers’ data, keeping it 100% insulated from Staples’s sales teams.”

Douglas added: “Adding our supply chain capabilities, expanded product assortment and e-commerce innovation to Essendant’s offering can provide dealers with even more resources to help them succeed—accelerating profitable growth for all of us.”

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