Staples unloads European business for a loss

Courtesy The company has sold off it's European business although the stores will retain the Staples name.

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By Sam Bonacci

One of the major puzzle pieces of Staples focusing on its North American retail effort was put in place today, with the company selling off its European business at a loss of approximately $117 million.

“One of our top strategic priorities has been to narrow our geographic focus on North America, and this is an important step toward simplifying our operations and better positioning Staples for sustainable long-term growth,” Shira Goodman, CEO and president of Staples, said in a statement.

The sale is being made to Cerberus Capital Management, according to a release announcing the transaction. According to regulatory filings, Cerberus is purchasing 85 percent of outstanding shares in Staples Europe and 100 percent of preferred shares for 50 million euros. Upon completion of the deal, Staples will deliver the Cerberus-owned company a 20 million euros cash balance as well as approximately 140 million euros to cover Staples Europe debts, pension deficit and other costs.

The sale closely follows the sale of Staple’s UK business and is part of the company’s Plan B that was put into action following a failed merger with Office Depot.

Staples is retaining a 15 percent equity interest in the business and will be represented on its board of directors following the closing of the transaction. The parties anticipate closing the transaction during the first quarter of Staples’ fiscal 2017 year.

Upon closing of the transaction, the Staples Europe business will be separated into a privately-held company controlled by an affiliate of Cerberus. The new company will enter into a licensing agreement with Staples for the use of certain Staples intellectual property, including its brand, a global accounts agreement, and transition services agreement governing a variety of services for defined periods.

Correction: A previous version of this story stated that the sale was for $1.83 billion.