Staples offers to buy Essendant
Essendant Inc. has confirmed that it received an unsolicited proposal from Staples Inc. to acquire all shares of Essendant stock for $11.50 per share in cash.
Staples is a portfolio company of Sycamore Partners, which has a 9.9 percent ownership stake in Essendant.
On April 17, Staples communicated its initial proposal to Essendant, which Essendant declined. Staples sent a revised proposal on April 29 stating that it believed it will be able to identify incremental value opportunities to enable it to increase its offer significantly in excess of $11.50 per share after receiving confidential information and engaging in discussions with Essendant. On May 4, Essendant's board determined that Staples' revised proposal is reasonably likely to lead to a "Superior Proposal" as defined in the merger agreement with Genuine Parts Company.
On May 7, GPC made an enhanced proposal to the previously announced merger agreement with Essendant under which Essendant shareholders would be provided a nontransferable right to a contingent cash payment following completion of the merger and based on the subsequent trading price of Essendant shares.
As previously announced on April 12, Essendant entered into a definitive merger agreement to combine Essendant and GPC's S.P. Richards business. Upon closing of the transaction, GPC shareholders will own approximately 51 percent and Essendant shareholders will own approximately 49 percent of the combined company. The merger agreement with GPC remains in effect, and the Essendant board has not changed its recommendation that Essendant's shareholders vote in favor of that transaction, according to a statement issued by Essendant.
In response to the offer by Staples to acquire Essendant, Genuine Parts Company issued a statement indicating that it remains committed to completing its transaction with Essendant by the end of 2018.
"We do not believe Staples' conditional, non-binding proposal to acquire Essendant for $11.50 per share in cash to be a superior proposal nor reasonably likely to lead to a superior proposal as defined under the terms of the Merger Agreement. Indeed, given the proposed enhanced terms and the expected financial benefits of more than $75 million in annual run-rate cost synergies and more than $100 million in working capital improvements, we are confident that the merger between S.P. Richards and Essendant delivers superior value to Essendant's shareholders."
GPC said the combined company will have an enhanced ability to support customers, including greater resources to support and partner with the independent dealer channel and resellers in other sales channels; optimized product assortment of branded and private-label products across a broad set of categories; enhanced capability to develop and offer innovative solutions to customers, including value-added marketing and analytics to drive demand; and consolidated distribution network with greater efficiencies throughout the entire supply chain.
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