Still no talks between Staples and Essendant

July 9, 2018

Essendant has confirmed that Staples has still not engaged in discussions with it in relation to Staples’ 29 April acquisition proposal for the wholesaler.

In a short regulatory filing with the US Securities and Exchange Commission on 3 July, Essendant said that Staples had still not entered into a confidentiality agreement with the wholesaler – a revised draft of which Essendant sent to Staples on 17 May – nor had it engaged in discussions over its proposal to acquire Essendant.

Nevertheless, it appears that Staples’ owner Sycamore Partners is pressing ahead with its attempt to acquire the wholesaler. In the same 3 July SEC filing, Essendant revealed that it had been informed by the US Federal Trade Commission (FTC) that the antitrust authority intends to issue a civil investigative demand (CID) to Essendant in connection with Sycamore’s 1 June filing to the FTC.

This CID will require Essendant to provide the FTC with information pertaining to the proposed Sycamore transaction and, as Essendant pointed out in the SEC filing, it would appear that the FTC has issued a second request to Sycamore in order to take a closer look at the potential antitrust concerns of an Essendant/Staples tie-up.

Essendant also said that its ‘poison pill’ shareholders rights plan – which essentially prevents Staples from increasing its 11% shareholding in Essendant – is still in effect.

The Essendant board continues to recommend that the company’s shareholders vote in favour of the proposed merger with Genuine Parts (GPC)-owned SP Richards, which itself is the subject of a second request from the FTC. Any vote could not take place, of course, until GPC and Essendant have filed all the paperwork required for the second request, after which the FTC has another 30 days to decide whether to take legal action to block the merger.

For Essendant management, that means responding to both the SP Richards-related second request and the Sycamore-related CID, so they have a lot on their plate at the moment from a regulatory standpoint.

 

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