Staples purchase contested on several fronts
Flickr/Mike Mozart
A proposed $6.9-billion acquisition to take Staples private is being contested by several law firms saying Staples' board of directors may have violated their fiduciary duty in approving the deal.
Since the planned purchase by Sycamore Partners was announced in late June, at least four firms have said they're legally contesting the proposal.
Louisiana law firm Kahn Swick & Foti, which includes former Louisiana Attorney General Charles C. Foti, said it is investigating whether the purchase, for an estimated $10.25 a share, undervalues the Framingham retailer.
"KSF is seeking to determine whether this consideration and the process that led to it are adequate," the law firm said.
The securities litigation law firm of Brower Piven, which has offices in Maryland and New York, said it is investigating whether Staples directors adequately pursued alternatives to the acquisition and whether the board obtained the best price possible for the company.
A third firm, Rigrodsky & Long of Delaware gave a similar statement, and a fourth, Securities and Exchange Commission attorney Willie Briscoe's Briscoe Law Firm of Houston, said the $10.25-per-share price is virtually no premium over the 52-week high and lower than at least one analyst’s estimated value of $12 per share.
Sycamore's purchase of Staples would bring the retailer under common ownership with a range of other retailers including Coldwater Creek, Hot Topic, Nine West, Talbots and The Limited. The proposed deal comes after Staples lost $615 million last year and closed 48 stores, leaving it with around 1,500 North American locations.
Staples announced in March is plans to close about 70 more stores this year. The company sold its European division at a $117-million loss last December, about six months after the company's planned $6-billion merger with rival Office Depot fell apart.
Staples, whose shares traded at just over $10 Thursday morning, said its board of directors unanimously approved the merger agreement and recommends all Staples stockholders vote in favor of the transaction. The deal is expected to close by December, pending regulatory and shareholder approval.
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