A report that several private equity firms -- including original investor Bain Capital -- are considering buying Staples Inc. pushed the office supply chain’s stock up as much as 6.2% on Friday.
Acquisition talks are still preliminary and any offer likely won’t come until later this year, according to a report by Fortune citing unnamed sources familiar with the situation.
The size of the deal would be so large, based on Staples’ roughly $8-billion market cap, that at least three firms would have to join forces to come up with the needed investment, according to Fortune. And potential owners are wary of attracting too much attention by bidding for a company with ties to a presidential candidate just before the election.
Republican nominee Mitt Romney, a cofounder of Bain, was a key player in Staples’ launch and sat on the company’s board of directors for more than a decade.
At the Republican National Convention, Staples founder Thomas Stemberg went to bat for Romney, saying that the candidate saw the company as “the engine of prosperity it could become.”
Now Staples employs nearly 90,000 people and has more than 2,000 stores, Stemberg said.
Neither Framingham, Mass.-based Staples nor Bain Capital could immediately be reached for comment.
In Staples’ second quarter, which ended July 28, Chief Executive Ron Sargent said results “fell short of our expectations due to softer than expected sales trends in North America and ongoing weakness in Europe and Australia.”
Sectors such as computers and core office supplies were weak, he said. The company said it was adopting a more conservative sales and earning outlook and planned to make “significant changes to improve results.”
Net income slipped to $120.4 million, or 18 cents a share, from $176.4 million, or 25 cents a share a year earlier, a 31.7% decline. Sales dipped 5.5% to $5.5 billion.
On Friday, office supply rivals were enjoying a stock boost on Staples’ tail. Office Depot Inc. was up as much as 5.9% to $2.50 a share while OfficeMax Inc. got as much as 9.8% to $7.81 a share. Staples was up as high as $12.70 a share.