Jefferies: We Still Think Staples-Office Depot Deal Gets FTC Approval

• Staples, Inc. (NASDAQ: SPLS) has seen a 29.28 percent decline in its share price year-to-date.
• Jefferies’ Daniel Binder has maintained a Buy rating and price target of $20 on the company.
• Binder believes that the deal with Office Depot Inc. (NASDAQ: ODP) is likely to be successfully completed and that Staples’ stock offers a favorable risk/reward profile.

According to the Jefferies’ report, a recent article in the New York Post suggested the possibility of the Staples/Office Depot deal being blocked. However, the article also notes that “the FTC’s Bureau of Economics is not keen to stop the merger.”

Binder believes that this indicates the agency “does not have the data to support a lawsuit to block the deal.” The other factor that Binder believes could block the deal would be customer complaints. However, Jefferies’ research suggests that there isn’t much “formal complaint activity.”

In addition, given that WB Mason is among the biggest competitors for Staples and Office Depot, the FTC would have sought the CEO’s opinion if it was trying to block the deal. However, President and CEO of WB Mason, Mr. Meehan, has told the Wall Street Journal that he has not been contact by the commission in recent times.

“Further, our checks indicate WB Mason is not in talks to be part of a solution for an FTC remedy requirement that many have hypothesized about,” the Jefferies report said.