Industry Spotlight
Deal to boost Staples
Office supply chains OfficeMax Inc. (OMX) and Office Depot Inc. (ODP) rose last week as an analyst reinstated a “neutral” rating on Staples Inc. (SPLS), saying he expects a recent acquisition to add significantly to the company’s earnings.
Goldman Sachs analyst Matthew J. Fassler's rating of the world's largest office supplier came as the company said it acquired 99 percent of the outstanding shares of Dutch office supply company Corporate Express NV for $2.7 billion. “(Staples) continues to produce the best results in its sector, which we expect to continue through the current tumultuous environment,” Fassler writes in a report. “At the same time, office superstores are experiencing pressure beyond that explained by historical relationships between macro factors and sales.”
Fassler says he expects the deal to boost earnings even when considering likely lost sales and lower adjusted margins in the Corporate Express North American delivery business. He has a price target of $27 on the shares. Last week, Staples shares climbed about 7 percent. OfficeMax Inc. climbed more than 15 percent to end the week at $13.35. Office Depot Inc. was mostly unchanged, closing at $6.52.
