Sycamore Partners said on Wednesday it would acquire US office supplies chain Staples for $6.9 billion, a rare bet by a private equity firm this year in the US retail sector, which has been roiled by the popularity of internet shopping.
Buyout firms largely have refrained from attempting leveraged buyouts of US retailers in the past two years, amid a wave of bankruptcies in the sector that have included Sports Authority, Rue21, Gymboree and BCBG Max Azria.
Sycamore’s deal for Staples, however, which Reuters was first to report would come this week, illustrates that some buyout firms are distinguishing between mall-based fashion retailers, which are vulnerable to changing consumer tastes, from retailers with a niche and rich cash flow, such as Staples.
The acquisition also shows that Sycamore, whose buyout fund is dedicated to retail deals, is willing to take on the risk of falling store sales at Staples because of the potential it sees in Staples’ delivery unit, which supplies businesses directly.
Sycamore said it would pay $10.25 per share in cash for Staples. The shares ended trading at $9.93 on Wednesday after Reuters reported the exact deal price. Staples said the deal was expected to close by December. Shira Goodman will remain as Staples CEO.
Full Content: Wall Street Journal
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