(Reuters) - Private equity firm Sycamore Partners is in advanced talks to acquire Staples Inc SPLS.O following an auction for the U.S. office supplies retailer, people familiar with the matter said on Wednesday, in a deal that could top $6 billion.
The acquisition would come a year after a U.S. federal judge thwarted a merger between Staples and peer Office Depot Inc ODP.O on antitrust grounds.
It would represent a bet by Sycamore that Staples could more quickly shift its business model from serving consumers to catering to companies if it were to go private.
Sycamore is in the process of finalizing a debt financing package for its bid for Staples after it prevailed over another private equity firm, Cerberus Capital Management, three sources said.
An agreement could be announced as early as next week, though negotiations between Sycamore and Staples are continuing and there is still a possibility that deal discussions could fall apart, the sources added.
The sources asked not to be identified because the negotiations are confidential. Framingham, Massachusetts-based Staples and New York-based Sycamore declined to comment. Cerberus, which is also based in New York, did not immediately respond to a request for comment.
Staples, which made its name selling paper, pens and other supplies in retail stores, reported a smaller-than-expected fall in first-quarter comparable sales last month, while its profit met analyst estimates, helped by a growth in demand for facilities, breakroom supplies and technology solutions.
Staples has 1,255 stores in the United States and 304 in Canada. It has the largest market share of office supply stores in the United States at 48 percent, and its share has increased since 2011, according to Euromonitor.
Private-equity acquisitions of retailers have become increasingly rare, as the investment firms worry about increasing headwinds facing the industry and their portfolio companies struggle with the debt burden left behind from leveraged buyouts. Retail deals comprised the smallest share of mergers and acquisitions in the first quarter of the year, according to Thomson Reuters data.
A number of private equity-backed retailers, from Sports Authority Inc to Payless ShoeSource Inc, have filed for bankruptcy in the last two years.
Sycamore, however, specializes in retail investments and has been more bullish on the sector. Its previous investments include regional department store operator Belk Inc, discount general merchandise retailer Dollar Express and mall and web-based specialty retailer Hot Topic.
Reporting by Greg Roumeliotis and Lauren Hirsch in New York; Editing by Lisa Shumaker
Our Standards: The Thomson Reuters Trust Principles.