Staples Inc (SPLS) And Office Depot Inc (ODP) – Is A Courtship Viable?

While the investor population at large might cringe at the very suggestion, Jim Crammer is totally convinced that a merger-acquisition deal between Staples Inc (NASDAQ:SPLS) and Office Depot Inc (NYSE:ODP) could prove to be a savior for both companies. During his discourse on CNBC, Mr. Crammer not only recommended the joining of forces of the two companies but also backed his advice with logical reasons underlying such a course of action.

Both Staples Inc (NASDAQ:SPLS) and Office Depot Inc (NYSE:ODP) specialize in selling office products wherein the former is larger than the latter. Off the two, Staples Inc (NASDAQ:SPLS) operates from Framingham, Massachusetts, and maintains a prominent presence in USA, Canada, Europe, South America and Australia through its 2200 stores and 116 distribution centers. Ever since it was launched in 1985, the company has maintained its line of products as suitable for office use like computer, technology, business and furniture. Printing is also one of its branches and ‘Quill’ happens to be its leading brand.

For a company which enjoys a market-cap of $8.407 billion and a P/E ratio of 16.24, its shares have been fluctuating between a low of $10.70 and high $16.67 over a period of one year. More recently, Staples Inc (NASDAQ:SPLS) has announced quarterly dividends which are scheduled for release on 16^th October, 2014.

Office Depot Inc (NYSE:ODP) also provides solutions for work-place but is smaller in size as compared to Staples Inc (NASDAQ:SPLS). As per Mr. Crammer, in an era wherein mergers and acquisitions are commonplace, by combining strength both companies could do away with their ‘shrink to grow’ belief. As a single unit, not only will they be able to ensure global coverage but also versatility in products offered so that there is something for everyone. A merger would bring about an improvement in stock price too rather than cause it to tumble as most people believe.

This article has been written by Vinita Basu.

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