Staples, Inc. (NASDAQ:SPLS) wants out. SPLS stock soared more than 13% on Tuesday amid a report that the U.S. office supply retail giant was considering a sale — a year after regulators knocked down a proposed deal with rival Office Depot Inc (NASDAQ:ODP). Staples tried to buy its smaller rival for $6.3 billion.
Now, Staples has switched tactics, apparently looking for a private equity bid, according to a Wall Street Journal report. That same report points out that, with a typical premium, SPLS could court a $7 billion bid. Based on current prices, that would be another 12% higher from here.
If Staples were to go private, that would mark an end to a nearly three-decade stretch of publicly traded life; the company executed its IPO on April 27, 1989.
SPLS stock quickly spiked to the $10 level — a quick breach of its November-December highs — before falling back down to the $9.75 area, where price resistance is holding. It marks one of the biggest signs of life in shares since May 2016, when the Office Depot deal fell apart.
Broadly speaking, Staples is off more than 60% from its 2007 highs — a steady terminal decline with a few earnings-related bumps here and there, and of course, a period of optimism when it seemed Staples and Office Depot would join forces.
Revenues, for instance, have dipped 20% in just the past three years, and net income swung from a $620 million profit in 2013 to a massive $1.5 billion loss. While nearly half of that was affected by goodwill impairment and restructuring costs, it’s still an ominous figure.
Disturbingly, the company hasn’t posted positive comps since 2007, and same-store sales have declined by roughly 4% in each of the past four years.
The journey has been marked with some bizarre points, too, such as a threat to fire part-time staffers if they worked more than 25 hours in a given week.
For its part, Office Depot is getting a bid higher on the news, too, with ODP shares up more than 5% in Tuesday’s mid-morning trade.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
