Staples Acquires Office Depot in $6.3 Billion Deal

The office and electronics store just bought its biggest rival. 

Staples has announced an agreement that will allow the company to purchase Office Depot. The deal places Office Depot's equity value at $6.3 billion.

"This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment," said Ron Sargent, Staples' chairman and chief executive officer. "We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies."

If the deal goes through, Staples will have pro forma annual sales of around $39 billion. The company is currently ranked third among top internet retailers and Office Depot is ranked ninth. The merger will likely help the store better compete with current internet champ Amazon. In addition to office supplies, both retailers have a growing selection of tech items, including computers, tablets, TVs, home audio products, and assorted gadgets, placing them more and more in competition with electronics giant Best Buy. Office Depot previously purchased former rival OfficeMax in 2013.

The agreement is still subject to antitrust regulatory approval and Office Depot shareholder approval, but the deal is expected to close by the end of 2015.

Sources: Staples, The Wall Street Journal, Engadget