Consolidation in the office supplies business
Netherlands-based Corporate Express MV, which is the #1 direct distributor of office supplies in the world, announced plans to acquire rival French office supplies company Lyreco. Privately-held Lyreco is in the same business-to-business sector of the office supplies business, also has a wide international presence, and claims to be the leader in that area in Europe. The deal is for $2.7 billion, much of it in stock.
The move comes even as US-based Staples, the world's #1 retail chain for office supplies, has been making a hostile bid for Corporate Express. Staples had been offering around $2.4 billion for Corporate Express, which has a major presence in the US. For Staples the bid was an attempt to broaden its market with large corporations. But the new company would prove too expensive for Staples to take over.
Corporate Express has been hurt by the decline in the dollar, but its stock price has risen since the Staples bid. As a BusinessWeek article (Corporate Express buying French rival for $2.7B", 5/21/08) puts it, "Analysts said the move was a crafty way for Corporate Express to take advantage of its share price -- which has nearly doubled since Staples began courting it -- to thwart the American company." It is generally considered that the Corporate Express paid too much, but that it would do anything to avoid being taken over by Staples.
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