Top office supply chains Office Depot and Staples ended their planned $6 billion merger after a U.S. federal judge ordered to halt the deal based on antitrust concerns.
Staples, Office Depot terminate $6B merger https://t.co/PKeaaLUwEv
— CNBC International (@CNBCi) May 11, 2016
The judge granted the Federal Trade Commission’s request for a preliminary injunction, stating it would “substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business consumers.”
BREAKING: U.S. judge grants FTC request to block Staples-Office Depot merger https://t.co/B4V4GiCwLf pic.twitter.com/zkNSN4KNI4
— Jacob Gershman (@jacobgershman) May 10, 2016
Debbie Feinstein, head of the FTC’s competition bureau, applauded the decision.
“This deal would eliminate head-to-head competition between Staples and Office Depot and likely lead to higher prices and lower quality service for large businesses that buy office supplies,” Feinstein said.
After Office Depot had a successful acquisition of Office Max in 2013, it agreed to enter a merger deal with Staples. Office Depot is currently the second largest office supply chain, based in Boca Raton, Florida. Staples, headquartered in Framingham, Massachusetts, holds the number one spot.
This is the second time that a merger between the two companies was halted by antitrust regulators, with the first being in 1997. Profits for both Staples and Office Depot have declined in recent years as online shopping has become more popular.
“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’ CEO.
The NASDAQ halted trading on both Office Depot and Staples around 6:30 p.m. ET Tuesday evening. Both companies were hoping the merger would save over $1 billion annually.