Reuters reported Sycamore Partners is near a deal buy the retailer for $6 billion or higher, about $8.66 a share
Staples intrinsic value closer to $12 per share, says Citi
Private equity firm Sycamore Partners is in advanced talks to acquire Staples in a deal that could top $6 billion.
The acquisition would come a year after a US federal judge killed a merger between Staples and Office Depot on antitrust grounds.
It would represent a bet by Sycamore that Staples could more quickly shift its business model from serving consumers to catering to companies if it were to go private.
Staples, the office supply retailer, reported a smaller-than-expected fall in first-quarter comparable sales last month, while its profit met analyst estimates, helped by a growth in demand for facilities, breakroom supplies and technology solutions.
Staples has 1,255 stores in the United States and 304 in Canada. It has the largest market share of office supply stores in the United States at 48 percent.
Private-equity acquisitions of retailers have become a rare occurrence due to the tough retail environment due to online retailers such as Amazon.
A number of private equity-backed retailers, from Sports Authority to Payless ShoeSource, have filed for bankruptcy in the last few quarters.
Sycamore, however, has performed much better than its peers by investing in retailers. Its previous investments include department store operator Belk Inc., discount retailer Dollar Express and specialty retailer Hot Topic.
Citi analyst Kate McShane said the $6B offer appears low considering the value of the two business segments and things intrinsic value is closer to $12 per share based on the sum-of-the-parts valuation. McShane rates Staples a Buy with a $12 price target.
SPLS last traded at $9.23. It has a 52-weeks trading range of $7.24 – $10.25.
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