Staples offers to buy Corporate Express; offer rebuffed

Staples, Inc. (NASDAQ: SPLS) wants to buy the largest global supplier of office supplies to enhance its most profitable division. That company, Corporate Express, doesn't seem interested in Staples' offer, calling the U.S. retailer's $3.6 billion unsolicited offer inadequate and "significantly undervalues the company."

Corporate Express, based in Amsterdam, saw its shares trading above Staples' offer price once the bid was announced, signaling that investors expect a much larger offer price for the office supply company.

Although Staples knows all too well that U.S. regulators would probably not approve the acquisition of a U.S.-based retailer (its attempt to buy Office Depot in 1997 failed), Corporate Express is a smart move. The company does half its business in the U.S. already, and acquiring it would give Staples a much-improved delivery business in the U.S.

Sanford & Bernstein analyst Colin McGranahan said "the potential synergies could make this very accretive" to earnings. McGranahan then indicated that Staples' management team is conservative and smart, and that a higher office price could make things more difficult. Reading between the lines, then, Staples may not up its offer even though it's been rebuffed by Corporate Express.