Deal of the Day

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June 12, 2008

A United States office supplies company Staples Inc. has won its battle to buy Corporate Express NV and extend its dominance of the world’s office products market after the Dutch firm agreed to a sweetened bid of $2.65 billion US.

Staples on Wednesday said it had raised its all-cash bid to $14.39 per share from the $14.23 it offered last week. Its first offer, in February, was $11.28 per share.

Corporate Express, an office supplies wholesaler, said it has terminated a deal to buy privately owned French rival Lyreco, a pact seen as an attempt to fend off Staples.

Shares of Corporate Express rose 1.4 per cent to $14.31, almost triple the five-year low of $4.94 they touched in January before the takeover battle began. Staples shot up 4.4 per cent, or $1.02, to $24.17 on the Nasdaq.

For Staples, the deal expands its presence in the company contracts business in Europe and North America, where it competes with Office Depot and OfficeMax as well as Corporate Express.

“Staples will dwarf other office supply distributors,” Credit Suisse analyst Gary Balter said in a research note.

Analysts said a tie-up between Staples, a retailer, and Corporate Express, a wholesaler, makes strategic sense and could lead to big savings in the slowing U.S. economy. Balter estimated at least $250 million in cost savings over three years.

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