Staples (NASDAQ: SPLS) still intends on buying its office supplies retail rival Office Depot (NASDAQ: ODP) despite the FTC's attempts to block the merger, and it recently announced it was selling its print solutions business for an undisclosed sum to help further that end.
The print solutions division offers printing services to businesses, including business cards, brochures, labels, and packaging options. This part of the business will be acquired by Taylor's communications subsidiary, which was formed last year after bidding on Standard Register, a communications services company for financial services, healthcare, retail, and industrial markets that went bankrupt after over 100 years in business.
Staples copy and print business has been a key performing segment and has grown to account for nearly 10% of its retail sales with gross margins well in excess of the company as a whole.
Yet Staples is focusing on its core operations now as it tries to finalize its merger with Office Depot. The two office supplies retailers have been crippled by over-expansion over the years and are in the midst of closing underperforming stores. While the retail stores still account for the bulk of their revenue, the key to their success will be the corporate contract market where both companies derive some 40% of their top lines.
The FTC has charged that the merger will raise the prices the biggest 100 companies will have to pay, though Staples and Office Depot counter that 90% of their customers won't see any difference. Moreover, they allege Amazon.com is now swiftly moving into their business, and an executive from the Internet retailer gave devastating testimony that the regulatory agency tried to pressure the company to lie about its readiness to compete.
Staples and Office Depot were so confident the agency damaged its case that they did not present any evidence on their own behalf, an arguably risky move, particularly as the judge hearing the case is now reportedly pushing back on some of the retailers' assertions.
Despite the sale of the division, Staples will continue to offer printing services for its customers in store. The deal with Taylor is expected to close within the next few months.
A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early, in-the-know investors! To be one of them, just click here.
Rich Duprey has no position in any stocks mentioned.