New York – Activist investor Starboard Value may be fostering a merger between Staples and Office Depot.
The hedge fund has reportedly acquired a 6 percent stake in Staples and has increased its position in Office Depot from 8.6 to 10 percent of shares.
Retail analyst David Strasser of Janney Capital Markets believes Starboard is intent on getting both office supply chains to the negotiating table, and said neither retailer seemed opposed to a merger based on his recent discussions with their management teams.
Staples is the nation’s No. 1 office-supply chain, and still maintains a sizeable lead over second-place Office Depot, even after its merger last year with OfficeMax.
Observers believe a consolidation would allow the specialty chains to better defend against office-supply inroads from Costco, Walmart, Amazon.com and other discounters, although many, including management, doubt the merger would pass regulatory muster with the Federal Trade Commission (FTC), given the lack of competition on the contract side of their businesses.
Starboard, which ousted the entire board at Darden Restaurants (Olive Garden, LongHorn Steakhouse) earlier this year, pressed for a merger between Yahoo and AOL in September, the New York Times reported.