Likely takers – if any exist – would be one of a small number of private equity bidders according to the WSJ. The sentiment was anything but optimistic with sources saying talks were early and that there was no guarantee a deal would even surface.
In the event a takeover took place estimates are the company could be valued at $7 billion or more.
Related: HAS THE RETAIL APOCALYPSE ARRIVED?
Store Closings And Sale Of European Ops
Staples has been closing stores (48 in 2016) in the wake of competition from Amazon.com Inc. (NASDAQ:AMZNC), Wal-Mart Stores Inc. (NYSE:WMTD) and others. The company expects to shutter as many as 70 stores this year.
In December Staples agreed to sell a majority stake in its European operations. The company recently reported its fifth straight drop in annual sales and lost a fifth of its market value this past year.
A Sale With Few Buyers
The biggest problem Staples will face is finding a buyer. According to Fitch Ratings’ senior director of U.S. Corporates, David Silverman, "There's no obvious buyer for Staples among retailers and office supply manufacturers given Staples' size, the secular challenges facing the segment and the failed deal history with Office Depot."
Silverman went on to echo the sentiment of others that any potential buy would likely be a financial investor with sufficient resources to buy the company. Competitor and failed takeover target Office Depot was also forced to close 123 of its stores in 2016 and plans to close 75 more following the canceled merger with Staples.
Staples As Small Business Consultant
It’s not like Staples isn’t trying. Witness the transformation of the company’s very first store in Brighton, MA recently to a trendy Workbar. Millennials (the target demographic for this offering) sit in the café area, sip gourmet coffee and set up instant offices in this co-working space designed to appeal to small businesses, independent contractors and other entrepreneurs who already patronize co-working offices on a regular basis.
Shira Goodman, Staples new CEO sees a revamped Staples as a small-business consultant and, more importantly, a potential future business plan for the company. To Goodman, small to medium-sized businesses and the $80 billion market they represent is a space she wants to dominate.
Wall Street isn’t sure. Meanwhile, Staples shares closed Monday at $8.66 leaving the company with a market cap of just $5.7 billion. Tuesday saw a rebound based on the sale rumors. Shares closed Tuesday at $9.51 up almost 10% on the day.