With the clearance, Staples has moved a step closer to concluding the $6.3 billion Office Depot acquisition. Apart from this, the company is working in tandem with U.S authorities as well and has obtained the debt to finance the $6.3 billion transaction.
Similarly, the company has been working with authorities across the European Union, Canada, Australia, and China to close the transaction by the end of this year.
Earlier in the year, Staples had announced that it will acquire rival Office Depot in a multi-billion dollar deal. Together, the two companies would create a retail chain with approximately $39 billion in revenue and thousands of stores. The idea of this merger was not a new one as the same was proposed 18 years ago but dismissed by the Federal Trade Commission at the time, after being slammed as anticompetitive.
However, a changing consumer landscape is pushing it forward this time, as office supply retailers are facing more and more competition from companies like Wal-Mart Stores Inc. WMT and Amazon.com Inc. AMZN .
Staples expects the merger to generate annualized cost synergies of $1 billion by fiscal third year, after the deal is closed. However, the company expects to incur nearly $1 billion in one-time expenses to realize the above-mentioned synergies.
At present, Staples carries a Zacks Rank #3 (Hold), while Office Depot is a Zacks Rank #4(Sell) stock.
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