Sycamore Partners in advanced talks to acquire Staples in a deal potentially worth $6 billion

If the deal were to go through, Staples would most likely change its business model – from directly serving customers it would now cater to companies.

According to sources familiar with the matter at hand, Sycamore Partners, a private equity firm is in advanced talks to acquire Staples Inc, a U.S. office supplies retailer, in a deal that could top $6 billion.

The news comes a year after a U.S. federal judge thwarted its merger with its peer, Office Depot Inc citing antitrust concerns.

If the deal were to go through it would mean that Staples would most likely shift its business model from serving consumers to catering to companies.

As per three sources, Sycamore is in the process of finalizing a debt financing package for its bid.

An agreement on this deal could come through as early as next week, though sources have cautioned that the negotiations are ongoing and could potentially fall apart.

The sources preferred the cover of anonymity since negotiations are on-going and are thus confidential.

Incidentally, private-equity acquisitions of retailers have become something of a rarity with investment firms given the headwinds facing the industry and the eventual fallout of their portfolio companies and their struggle with the debt burden left behind from the leveraged buyouts.

As per Thomson Reuters data, retail deals make up the smallest segment of mergers and acquisitions in the first quarter of 2017.

In the last two years, a number of private equity-backed retailers, including Payless ShoeSource Inc and Sports Authority Inc, have filed for bankruptcy.

However unlike its peers, Sycamore specializes in retail investments and has been more bullish on the sector.

Its previous acquisitions include Hot Topic, a web-based specialty retailer, Belk Inc, a regional departmental store, and Dollar Express, a discount general merchandise retailer.


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