Private equity firm Sycamore Partners has agreed to scoop up Staples
(+8.41%)
for a cool $6.9 billion. An odd sign of faith in the 2017 retail
sector, when chains have been filing for Chapter 11 left and right (aka
Gymboree and Sears Canada).But maybe it’s just the right time…
Despite shares sinking from a pre-recession high of $25 and e-tailers plaguing its consumer business, the Massachusetts-based office retailer is actually running a pretty tight ship.
In 2016, Staples held a 48% share of total U.S. office supplies stores, while raking in a whopping $889 million in free cash flow. Even better? About 65% of revenue was driven by B2B sales.
And Sycamore Partners liked what it saw
After Staples’ failed merger with Office Depot (antitrust regulators struck again), Sycamore Partners is now paying a 20% premium in the biggest leveraged buyout of the year.
And it’s not just shuffling papers—here’s the three-part plan to get this baby rollin’:
- Grow the B2B delivery business
- Refocus its struggling consumer retail business
- Give its Canadian arm a helping hand
(BroBible.com)
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