Shares of Staples, Inc. SPLS were trading lower by more than 16 percent early Wednesday morning, while shares of Office Depot Inc ODP plunged more than 35 percent after the companies called off their proposed merger.
Staples said in its press release the decision to terminate the proposed merger follows the recent ruling of a U.S. District Court of Columbia which granted the Federal Trade Commission's request for a preliminary injunction to block its acquisition of Office Depot.
As part of the merger agreements, Staples will pay Office Depot a one-time break-up fee of $250 million. In addition, Staples will no longer proceed with its planned divestment of large corporate contract businesses and related assets to Essendant.
"We are extremely disappointed that the FTC's request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case," said Ron Sargent, Staples' chairman and chief executive officer. "We believe that it is in the best interest of our shareholders, customers, and associates to forego appealing this decision, terminate the merger agreement, and move on with our strategic plan to drive shareholder value.
He concluded, "We are positioning Staples for the future by reshaping our business, while increasing our focus on mid-market customers in North America and categories beyond office supplies."
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