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Staples Extends Tender Offer for Essendant
Friday 09 November 2018

9 November 2018 - Egg Merger Sub Inc. and Egg Parent Inc., affiliates of US-based office supplies retailer Staples, Inc., have extended the expiration time of a tender offer for all outstanding shares of US-based workplace items distributor Essendant Inc. (NASDAQ: ESND) to 12 November, the companies said.

The deal was announced on 14 September, by and among Essendant, Staples, Egg Parent and Egg Merger Sub.

The tender offer was previously scheduled to expire on 5 November. 

Egg Merger Sub and Egg Parent expect the tender offer will be consummated promptly following the expiration time (as extended hereby), subject to the satisfaction of the remaining closing conditions.

Under the deal, Staples will acquire all of the outstanding shares of Essendant common stock for USD 12.80 per share in cash, or a transaction value of USD 996m including net debt.

The transaction follows the determination by Essendant's board of directors, after consultation with Essendant's legal and financial advisors, that the Staples proposal constituted a "Superior Proposal" as defined in Essendant's previously announced merger agreement to combine with Genuine Parts company's (NYSE: GPC) S.P. Richards business.

Consistent with that determination, and following the expiration of the three-day waiting period during which GPC did not propose any amendments to the S.P. Richards agreement, Essendant terminated that agreement. In connection with the termination, GPC is entitled to a USD 12m break-up fee, which Staples is paying as part of its agreement with Essendant.

The USD 12.80 per share purchase price reflects a 51% premium to Essendant's share price on April 11, 2018, the day before the company announced plans to merge with GPC's S.P. Richards business, and a 10.3x multiple of last-twelve-months Adjusted EBITDA.

This transaction will be implemented through a cash tender offer at USD 12.80 per share.

The transaction is conditioned upon, among other things, the number of Essendant shares included in the tender offer, together with the 11.15% of Essendant's outstanding common shares currently owned by Staples and its affiliates, representing more than 50% of Essendant's outstanding common shares, expiration of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and other customary closing conditions.

If the tender offer is consummated, the tender offer will be followed by a merger in which any shares of Essendant common stock not purchased in the offer will be converted into the right to receive the same USD12.80 per share in cash.

The transaction is not subject to a financing condition and is expected to close in the fourth quarter.

Essendant Inc. is a national distributor of workplace items, with 2017 net sales of USD 5bn. The company provides access to a range of over 170,000 items, including janitorial and breakroom supplies, technology products, traditional office products, industrial supplies, cut sheet paper products, automotive products and office furniture.

Barclays and Morgan Stanley and Co. LLC are acting as financial advisors and Kirkland and Ellis LLP is acting legal counsel to Staples. Citigroup Global Markets Inc. is acting as financial advisor and Skadden, Arps, Slate, Meagher and Flom LLP is acting as legal counsel to Essendant.
Date Published: 09/11/2018
Target: Essendant
Country: USA
Deal Size: 996mm (USD)
Sector: Wholesale/Retail
Type: LBO
Financing: Cash
Status: Agreed
Buyer: Staples
Buyer Advisor: Barclays , Morgan Stanley and Co, Kirkland and Ellis
Essendant dumps existing Genuine Parts Company deal