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June 28, 2017
martinwolf  Transaction Analysis
Sycamore Partners to Acquire Staples

Financial Information*
  • Enterprise Value                                                ~$7.1B
  • EV/LTM Revenue                                                 0.39x
  • EV/LTM EBITDA                                                 5.9x
Transaction Facts
  • Sycamore Partners announced today that it was acquiring office supply retailer Staples (Nasdaq:SPLS) for $10.25 per share, representing a 12 percent premium over the company's share price Tuesday and an approximately 20 percent premium over the average stock price for the period ending April 3, the final trading day before reports of a potential transaction.
  • Staples shares jumped 8 percent on the announcement, and trading was ultimately halted after shares rose an additional 1.5 percent after the close.
  • The transaction is expected to close by December 2017, and is not subject to a financing condition.
  • News of Sycamore Partners' pending bid was initially reported one week ago today, and was detailed in our spotlight.
An 'Iconic' Brand, But a Tough Road Ahead
  • Big Bet: Sycamore Partners cited Staples' "iconic brand" as one of the company's key strengths -- it has the largest market share of office supply stores in the United States at 48 percent. But even with that market presence, the company has struggled in the face of increasing competition -- particularly from Amazon.
  • A History of Success: Staples has always been ahead of its peers in terms of selling non-proprietary products at high margins. While traditional VARs usually earned margins in the low teens, Staples historically was routinely in the high 20 percentages.
  • Eye of the Beholder: Private equity takeovers in the retail space are fairly rare, as increased competition leads to declining growth and debt service becomes cost-prohibitive on top of normal operations. But Sycamore has bucked the trend, establishing retail as its niche through a string of acquisitions including Dollar Express and Hot Topic.
  • Looking Back: Staples founder Tom Stemberg was a visionary, reportedly founding the company when he could not find a ribbon for his printer over the Independence Day holiday. He was a friend to martinwolf, and while the company was unable to become dominant in the SMB services space, it now has the chance for a new beginning and with it significant progress.
For more information about this transaction,  click here to read the press release.

*Financial Information from S&P Capital IQ and the press release.

martinwolf was not the advisor in this transaction.

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About martinwolf    


With offices in the San Francisco Bay Area and New York, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 150 transactions in over 20 countries and sold seven divisions of Fortune 500 companies. 

 

martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.  

 

To learn more about martinwolf, contact Matthew Putzulu at mputzulu@martinwolf.com.

 

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"Some of the best opportunities
 in the world are the most obvious ones.
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Tom Stemberg
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