In 2013, office supply giants Office Depot and OfficeMax merged, resulting in only two global vendors—Office Depot, Inc. and Staples—for office products. In 2015, Staples is in the process of acquiring Office Depot, which would leave multinational companies and law firms with just one global office supply vendor by the end of the year. Some of our clients have already expressed concern as to how this will affect their contracts.
Yet the latest financial reporting indicates that the deal is far from done:
- The Wall Street Journal reports that the Federal Trade Commission is seeking sworn legal declarations from office supply vendors like W.B. Mason (a regional provider in the northeast) for more information on their contracts with enterprise clients. The findings could be used to challenge the deal.
- 24/7 Wall St. is reporting doubts that the deal will go through, as Staples and Office Depot have agreed to adding 15 additional days to the FTC’s mandatory 30-day waiting period for certain large mergers and acquisitions.
- Antitrust attorneys and securities analysts quoted in Bloomberg Business have cautioned that the current antitrust environment may result in a veto of the merger and The American Antitrust Institute (AAI) has called for a closer look.
While the merger has been approved in three regions of the world—Australia, New Zealand and China—the concern in the U.S. is that large corporate and government buyers would have very limited options for securing office supplies on contract, which currently accounts for about 40% of revenue for both Staples and Office Depot. The FTC is expected to announce its decision in October.
How Office Depot / Staples Merger Will Affect You
Nobody questions that the office supply procurement options will be restricted for global corporations and law firms. According to AAI Associate General Counsel Randy Stutz, “We don’t see any companies left in the enterprise contract market that can mount a serious challenge to Staples or Office Depot.”
I share that concern. It remains to be seen if regional players like W.B. Mason can fill the void. Staples argues that global suppliers like Walmart and Amazon.com will ensure office supply markets remain competitive, but we don’t see that happening. Their retail expertise may not translate to business-to-business markets and the unique needs of global enterprises. Amazon.com launched Amazon Business in April with benefits like free two-day shipping for office supply orders of $49, but the service doesn’t offer the flexibility that most large buyers of office products expect and require.
We strongly suggest that large buyers take this opportunity to assess their options. Whether the Staples & Office Depot merger happens or not, clients of both vendors will be affected in some way. There is a short window of opportunity to review current office product contracts, in order to mitigate the possibility of higher prices and reduced service levels.
Learn more about our Office Supply Global Procurement Program.
Or contact us to schedule a review or ask any questions regarding your office supply issues or needs.
Kevin Lee
Latest posts by Kevin Lee (see all)
- Staples/Office Depot merger failed in 2015 - January 5, 2016
- The Staples/Office Depot merger - September 17, 2015