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Staples-Office Depot Deal Hits Snag: Report

Staples’ proposed $6.3 billion buyout of Office Depot may be hitting a regulatory roadblock.

According to the New York Post, the Federal Trade Commission (FTC) is split on whether to approve the deal, which two of the four regulators fear will stifle competition within the corporate and government channels.

They may have also been swayed by comments from some large corporate customers who believe the merger will lead to less competition and higher prices, the Post reported.

Staples and Office Depot are the only two national office suppliers serving corporate customers and are estimated to handle all of the Fortune 1000 office supply contracts, the newspaper said.

The acquisition would give Staples $39 billion in annual sales and, according to analysts, the best chance to salvage the specialty channel amid fierce competition from big-box and online discounters.

Office Depot itself merged with OfficeMax two years ago last month.

Staples has already tried appeasing the FTC by offering to transfer about $600 million in back-end contracts to office supply wholesaler Essendant. But sources close to the situation told the Post that the regulators may be holding out for further concessions, and are prepared to pursue litigation to squash the purchase.

The FTC has until Dec. 8 to decide whether it will go to court, the Post reported.