The Federal Trade Commission announced on Monday that it has approved, with conditions, the proposed USD 482.7 Million merger of Staples Inc. and Essendant Inc. (NASDAQ: ESND).
Staples, which is owned by the private-equity firm Sycamore Partners, is required to establish a firewall that will restrict the Company’s access to the commercially sensitive information of Essendant’s customers.
The firewall resolves FTC allegations that the deal may have harmed competition in the market for office supply products sold to small-sized and mid-sized businesses. A complaint was issued stating that Sycamore’s and Staples’ access to commercially sensitive information could lead to anticompetitive conduct and constitutes a violation of Section 5 of the FTC Act. With information on Essendant’s reseller customers and those resellers’ end customers, Staples could offer higher prices than it otherwise would when bidding against a reseller for an end customer’s business.
Essendant Inc., founded in 1920, is the largest U.S wholesaler of office products. With over 2 million products in its portfolio, the Company also distributes janitorial products, breakroom supplies, technology products, office furniture, and industrial and automotive products. Staples, headquartered near Boston, MA, is the largest vertically integrated reseller of office products in the United States.
The merger of the two office supply distributors has been in the works since September 14th, 2018, when Staples and its affiliates proposed to acquire all outstanding shares of common stock of Essendant at USD 12.80 per share.
“We are excited about the opportunity to move forward with this agreement, and to work with the Essendant team to complete the partnership of these two great companies, which will ultimately deliver significant value to independent resellers and end customers across the U.S.,” Staples said.