Framingham, Massachusetts-based office-supply chain Staples has been sold to private equity firm Sycamore Partners for a whopping $6.9 billion dollars. This will be a big change for Staples, which was founded in 1986 and has struggled in recent years. While this deal is going forward, the same did not happen with the proposed merger between drug store giants Walgreens and Rite Aid: the whole thing has fallen apart.
More details on Staples getting sold
In recent years, Staples – like many retailers in America – has been hurt by the massive shift to online shopping.
The company has also been hurt by Amazon jumping into the fray and becoming competition for corporate customers. In the last five years, Staples has seen its sales decline by 6.1% and has had to cut down the number of stores it runs from nearly 2,300 to around 1,600. In April, the company confirmed that it was exploring the possibility of being sold and now, only two months later, that has happened.
The sale to New York-based Sycamore Partners is expected to be officially finalized later this year, with Staples shareholders getting $10.25 per share. Following news of the deal, Staples' stock rose by 8.4% to $9.93 cents, with it rising by an extra 1.5% in extended trading. This deal will now allow Staples to adjust to the challenges that come with being a private company.
What went wrong in the merger of drug store giants?
It was a proposed $10 billion dollar merger between two of America's largest drug store companies, Walgreens and Rite Aid. This was a deal that had been almost two years in the making, having been announced in October 2015, reworked last December and then scaled back in January.
However, the merger had faced intense scrutiny from the Federal Trade Commission (FTC) since it was first announced. It would have left America with only two major pharmacy chains, Walgreens and CVS. The FTC was going to vote on the merger today, with many believing that it was nixed since it was widely expected to be voted against.
Instead of the merger, both sides came to a new agreement. Walgreens will buy 2,186 of Rite Aid's 4,536 stores for a total of $5.2 billion. Rite Aid will also be paid $325 million due to the canceled merger. This deal will first need to get regulatory approval and then Walgreens will acquire the stores over a six month period. These Rite Aid stores will eventually be rebranded as Walgreens, but the process could take years due to the number of stores involved.
