AMSTERDAM (Reuters) - Office supplies retailer Staples Inc raised its bid for Corporate Express NV to 1.7 billion euros ($2.7 billion) and urged the Dutch company’s shareholders to spurn the target company’s own takeover plan.
Staples lifted its all-cash offer to 9.15 euros a share on Tuesday from the 8 euros it bid last month, contingent on Corporate Express shareholders rejecting the company’s plan announced last month to buy privately owned French peer Lyreco.
Holders of about 23.3 percent of Corporate Express, one of the world’s largest wholesalers of office products, have committed to accept the offer, Staples said in a statement.
Corporate Express said it would carefully review the new offer and make a further announcement in due course, in contrast to its outright rejection of Staples’ previous bids. Lyreco declined to comment.
Analysts have said a tie-up between Staples and Corporate Express would make strategic sense and could lead to big savings at a time when both are trying to deal with a slowing U.S. economy.
Staples is only interested in Corporate Express and would probably not make a bid for a combined Corporate Express and Lyreco, Staples Chief Executive Ron Sargent told Reuters in an interview.
“We think there are significant anti-trust and regulatory issues,” he said.
Analysts said Staples’ new bid would probably succeed although Corporate Express could still try to delay it by issuing shares to an independent foundation -- a tactic Dutch industrial group Stork tried unsuccessfully last year and semiconductor equipment maker ASMI used last month.
Such a move would be disruptive for Corporate Express shareholders, said Sargent.
“At this point, we are assuming they will not take that avenue,” he said. He said Staples would pursue other opportunities if its new offer was rejected.
Petercam analyst Fernand de Boer said: “We expect a number of shareholders to support the Staples bid, preferring the short-term cash above the longer-term uncertain value.”
Corporate Express shares closed up 6.8 percent at 8.93 euros, outperforming the DJ Stoxx European industrial goods and services index which was up 1.1 percent. Staples was 0.6 percent firmer by 11:40 a.m. EDT.
Corporate Express earlier on Tuesday urged its shareholders to vote for its 1.7 billion euro takeover of Lyreco, seen as a defense against the unsolicited Staples bid.
Staples said its new offer valued Corporate Express at 9.7 times enterprise value against projected 2008 earnings before interest, tax, depreciation and amortization (EBITDA).
It said Corporate Express shareholders including hedge funds Centaurus, York Capital and Halcyon had committed to tender their stakes and to vote against the Lyreco plan at a shareholders meeting due on June 18.
It set a minimum acceptance threshold of 51 percent and said it expects its offer to close in early July. Staples said it had secured a $3 billion credit line for the deal.
Corporate Express trades at 16 times estimated 2008 earnings, compared with Staples at 15.5 times and Office Depot trades at 12.3 times, according to Reuters data.
Additional reporting Astrid Wendlandt in Paris and Harro ten Wolde; Editing by Quentin Bryar and David Holmes