Court: Office Depot-Staples Merger Shut Down
Federal judge Emmet Sullivan has blocked the proposed $6.3 billion merger of Office Depot and Staples stores. The decision came in the form of an injunction against the acquisition, and was felt as a surprise by some observers on social media, who prematurely proclaimed the success of the deal.
The Federal Trade Commission sought to block the merger in Sullivan’s courtroom on the basis that the deal would be anticompetetive and would harm consumers. Observers of the case noted that Sullivan’s attitude seemed to favor the merger early, or at least seemed to be critical of the FTC’s case. From Bloomberg’s piece by David McLaughlin and Andrew M. Harris:
The decision caps Sullivan’s role in an often contentious proceeding during which the judge criticized the FTC’s handling of the case and frequently interrupted the questioning of witnesses for his own queries. That led some investors to become optimistic that he would allow the deal to proceed.
“Given some of the judge’s rulings during the trial, it was somewhat surprising,” Seth Bloom, an antitrust lawyer at Bloom Strategic Counsel. “This is another example of how one can’t make a judgement based on a judge’s comments from the bench.”
Staples Chief Executive Officer Ron Sargent said in a statement that the company was “disappointed” by the decision and that it won’t appeal the ruling. The company will instead focus on a strategic plan that includes trying to win mid-market business customers, exploring alternatives for its European operations, cutting costs and returning cash to shareholders.
Office Depot currently operates over 1,900 locations, Staples, over 3,800 worldwide. Bloomberg video on the case: