Staples, Office Depot Partnership 18 Years Coming?

Shares of office products company Staples, Inc. SPLS took a big hit Wednesday when it announced its plan to acquire competitor Office Depot Inc ODP. Although the FTC disapproved the same merger 18 years ago, Staples is hopeful that this time the deal will go through.

Staples co-founder, former Chairman and CEO Tom Stemberg was on CNBC to talk about the deal and the challenges Staples faces in getting it done.

Related Link: Staples Bids $11/Share In Cash, Stock For Office Depot

Has The Partnership Been 18 Years Coming?

“Well, I just remember a miserable June fighting the FTC on this,” Stemberg said. “We had David Glass tell it about what Wal-Mart was going to do. And the Internet was already beginning to be a factor in the industry and creating price transparency. And they created what probably was one of the biggest legal precedence in their history in their favor from an antitrust perspective.”

He continued, “And what’s going to be curious to see is if they can walk away from that precedence by approving this deal, or will they try to figure out a way to fight it.”

What Do You Think The FTC Will Do?

“I don’t know; I am not a lawyer. But my father-in-law is an antitrust lawyer and he also talks about how significant a precedence this is,” Stemberg replied.

“I think they have to fight it and they’ll 'jury rig' the market […] the retail sales of office supplies or something like that to try to block this. Then it’ll be potentially a long and nasty legal skirmish.”

Related Link: Staples, Office Depot Merger Likely To Be Cleared By Regulators

Will Past FTC Comments On Previous Mergers In The Sector Help?

“Oh, that’s the hope, but obviously this is great for shareholders if it happens. Staples management team is very talented at merging companies and cutting costs. And I think they’ll create, over time, a very efficient enterprise that at the end of the day those will still be challenged try to find a way to grow,” Stemberg said.