Office supply retailer Staples Inc (SPLS.O: Quote, Profile, Research) is expected to raise its bid for Dutch rival Corporate Express (CXP.AS: Quote, Profile, Research) in the face of resistance, but it is considered unlikely to be prompted by a counterbid.
After several unsuccessful attempts to hold friendly merger talks, Staples bid 7.25 euros per share, or a total of 2.5 billion euros ($3.7 billion), which Corporate Express swiftly rejected on Tuesday.
“Corporate Express is not likely to surrender easily, and we are not sure whether Staples is willing to pay the price required,” said ABN AMRO analyst Mark Pieter de Boer. “We do not believe Corporate Express is a seller below 10-11 euros.”
Working out differences between the two could take time, analysts said, given the lack of a counterbid and difficulty in assessing the Dutch firm’s value.
The offer is widely seen as a first overture, ending months of speculation about Staples’ interest.
Corporate Express shares are currently trading at 7.72 euros, 6.5 percent above Staples’ offer, suggesting the market expects a higher bid freecreditreport. Lifted by the offer, the shares have more than doubled from a year low of 3.18 euros just one month ago.
Analyst Fernand de Boer suggests Staples could pay 8.25 euros for its European rival, while others believe Corporate Express shareholders would not yield for less than 10 euros.
The acquisition would allow Staples to cut costs, increase its global footprint and expand in the U.S., a fragmented market where Corporate Express generates about half its sales.
Read more