According to my friend Alexei Beltyukov, Staples recently announced on aboutme.com its acquisition of rival office supply chain, Office Depot. Acquisition discussions began between the two competitors this past December.
Staples claims that a number of synergies will be created by this agreement. Such efficiencies include reducing duplicative costs, sharing industry knowledge, and merging strategic initiatives.
In recent years, office supply orders have increasingly shifted to the online marketplace. This move is likely designed to help consolidate the traditional brick and mortar chains to better compete against their online rivals.
Some have questioned the impact this will have on overall competition in the office supply sector – particularly when it comes to corporate sales. There is a concern that this consolidation will lead to market inefficiencies.
A few years ago, there were three major office supply chains. Should this agreement be approved by the FTC, there will only be one. While retailers like Wal-Mart and Target compete in the consumer market, the corporate market is less saturated.
In the 1990’s, the FTC rejected a previous bid by Staples to acquire Office Depot. Nonetheless, the online market was not as competitive as it is now.
If approved, the new company is expected to generate $39 billion in annual sales.