Fri Sep 14, 2012, 12:57 PM

Staples Surges On Report Of Possible Bain Capital Take Over

Source: value walk

The stock value of Staples, Inc. (NASDAQ:SPLS) surged by more than 4 percent to $12.49 per share during the early morning trading today, after Fortune reported that some private-equity companies, including Bain Capital LLC are interested in acquiring the largest office supply retailer in the United States.

The report from Fortune cited unidentified sources, saying that investors entered preliminary discussions to take-over Staples. The private equity firms are expected to submit their formal offer to take over the office supply retailer, although it would take them several months to arrange financing. In addition, the private equity firms do not want to face PR problems in acquiring the Staples, Inc. (NASDAQ:SPLS) during the campaign period, due to the relationship of Republican Presidential candidate Mitt Romney with Bain Capital and Staples. Romney co-founded Bain Capital, which was one of the earliest investors in Staples. He served as one of the board of directors of the office supply retailer.

Staples market capitalization is around $8.16 billion. Its stock value declined by 14 percent during the current fiscal year. During the previous two quarters, the Framingham, Massachusetts-based office supply retailer reported weak sales performance. Its second quarter sales this year declined by 6 percent to $5.5 billion, while its diluted earnings per share dropped by 28 percent, from 25 cents per share to 18 cents per share. The weak sales trends in its core office supplies and computers, particularly in North America, Europe, and Australia, affected the company’s financial performance.

Staples, Inc. (NASDAQ:SPLS) suffered a 2 percent declined in comparable store sales during the second quarter of 2012 in North America, while its international operations dropped by 18 percent in U.S. dollars, to $1.1 billion.

Read more: http://www.valuewalk.com/2012/09/staples-surges-on-report-of-possible-bain-capital-take-over/

Holy Shit, can it get any worse for Rmoney?

16 replies, 2646 views

Reply to this thread

Always highlight: 10 newest replies | Replies posted after I mark a forum

Replies to this discussion thread

16 replies	Author	Time	Post
Staples Surges On Report Of Possible Bain Capital Take Over (Original post)	trailmonkee	Sep 2012	OP
So we can expect an announcement	xxqqqzme	Sep 2012	#1
And mass firings?	sakabatou	Sep 2012	#12
It's another 'business miracle'!1!!1	louis-t	Sep 2012	#2
Didn't they own Staples before....	WCGreen	Sep 2012	#3
I'm sure Staples made rich people richer and that's all that matters in this world. nt	valerief	Sep 2012	#6
yes, post bain, they are Failing	trailmonkee	Sep 2012	#7
A Two-fer	BlueStreak	Sep 2012	#11
People at Staples should probably start looking for new jobs	Doctor Jack	Sep 2012	#4
Any man who can buy all the Blackwater goons in the world is still someone to fear. nt	valerief	Sep 2012	#5
Bye bye Staples...	EnviroBat	Sep 2012	#8
So...how long before the bankruptcy and closer?	SoapBox	Sep 2012	#9
Performance may be related to election	Yorkmeister	Sep 2012	#10
Staples bankrupt by 2013.	sarcasmo	Sep 2012	#13
It's the Private Equity Merry Go Round	bucolic_frolic	Sep 2012	#14
Guitar Center is another cadaver. They did a leveraged buyout with Bain and ended up with $650M in	truthisfreedom	Sep 2012	#15
your company better switch to cash in advance payments asap nt	msongs	Sep 2012	#16

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 01:01 PM

xxqqqzme (13,430 posts)

1. So we can expect an announcement

of the closing of stores a couple of months after the take over?

Reply to this post

Response to xxqqqzme (Reply #1)

Fri Sep 14, 2012, 02:38 PM

sakabatou (29,073 posts)

12. And mass firings?

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 01:04 PM

louis-t (12,506 posts)

2. It's another 'business miracle'!1!!1

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 01:06 PM

WCGreen (44,930 posts)

3. Didn't they own Staples before....

http://www.huffingtonpost.com/dave-johnson/so-did-mitt-romney-really_b_1681248.html

Staples

Staples grew into a major chain because they consolidated what different kinds of stores sold, offering a one-stop-shop for stationery products, office supplies, office-furniture, computers, etc. They also were able to be competitive because of the advantages of scale as they grew into a national chain, centralizing functions like accounting, purchasing, legal, marketing, etc. And never underestimate the power of having a ton of cash at your disposal. This is all just smart business, well executed.

As Staples grew it overtook competing chains like Businessland and others. In other words, Staples took business from other, existing stores -- often local retailers. Staples did not "create" jobs, it shifted office-supply jobs from local stores, etc., probably to lower-paying jobs. (The former owners of local businesses certainly were worse off from this.) They likely even lowered overall office-supply, stationery, etc. employment in the larger economy.

Low Wages?

How do these "Romney job creator" jobs stack up against other jobs? Average Staples salaries for job postings nationwide are 51 percent lower than average salaries for all job postings. The pay at Staples appears to be around $8-10 an hour. That's $16-20,000 a year, certainly not enough to support a family, or even pay rent in many areas, never mind buying food. (The 2012 poverty guideline for family of four is $23,050.)

Reply to this post

Response to WCGreen (Reply #3)

Fri Sep 14, 2012, 01:12 PM

valerief (35,676 posts)

6. I'm sure Staples made rich people richer and that's all that matters in this world. nt

Reply to this post

Response to WCGreen (Reply #3)

Fri Sep 14, 2012, 01:20 PM

trailmonkee (2,595 posts)

7. yes, post bain, they are Failing

Last edited Fri Sep 14, 2012, 02:12 PM USA/ET - Edit history (1)

Reply to this post

Response to trailmonkee (Reply #7)

Fri Sep 14, 2012, 02:32 PM

BlueStreak (3,780 posts)

11. A Two-fer

You don't usually get two chances to suck the blood out of the same company.

Well, this will give the Mit-wit something to do after the election.

If he's like to get started early, I think I can speak for all of America when I say, "Sure Mitt. You just go what you need to do. We'll take care of this Presidency thing. You just go and have fun playing with your companies. It's all right. Really."

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 01:09 PM

Doctor Jack (788 posts)

4. People at Staples should probably start looking for new jobs

Looks like Staples will be liquidated soon. Very sad.

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 01:10 PM

valerief (35,676 posts)

5. Any man who can buy all the Blackwater goons in the world is still someone to fear. nt

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 02:10 PM

EnviroBat (5,259 posts)

8. Bye bye Staples...

I liked that store. It will be out of business within 6 months, and Bain will have cashed in once again...

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 02:16 PM

SoapBox (5,820 posts)

9. So...how long before the bankruptcy and closer?

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 02:28 PM

Yorkmeister (1 post)

10. Performance may be related to election

I stopped shopping at Staple when Mitt started politicizing it early this year. Surely others did as well. It would ironic if the performance suffered due to Romney, who after he loses than makes money flipping the old fashion way

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 02:39 PM

sarcasmo (13,550 posts)

13. Staples bankrupt by 2013.

Reply to this post

Response to trailmonkee (Original post)

Fri Sep 14, 2012, 03:41 PM

bucolic_frolic (708 posts)

14. It's the Private Equity Merry Go Round

Lots of firms are bought out, taken private, taken public, taken private again. Hotel chains, stores ... here's one example:

"Here's a brief history of how Burger King has been flipped on the private-equity
griddle over the past decade:

Goldman Sachs (GS -0.47%, news) and the private equity firms TGP and Bain
Capital (famous for being co-founded by GOP presidential contender Mitt Romney)
took control of Burger King in 2002. Four years later, they took it public,
extracting a $448 million dividend in the process. Next, Burger King was taken
private by 3G Capital in 2010. Now it's public again, though 3G Capital retains
a 71% stake.

The upshot: In total, private equity has sucked $1 billion out of Burger King
along the way, estimates Howard Penney, the managing director at Hedgeye, a
stock research firm. "It's been a party for Wall Street," says Davidowitz. "The
private equity guys have made a fortune." But like all parties, this one has
come at a cost. "They've been jerking the company around, making a fortune. The
problem is the company is a cadaver." "

http://money.msn.com/investing/why-burger-king-is-no-big-mac-brush.aspx?page=0

Reply to this post

Response to bucolic_frolic (Reply #14)

Fri Sep 14, 2012, 06:33 PM

truthisfreedom (17,677 posts)

15. Guitar Center is another cadaver. They did a leveraged buyout with Bain and ended up with $650M in

debt. By some estimates, each of their stores would have to spend the first $2k to $4k of each day's income on servicing the interest alone. That debt has now ballooned into $1.2B+, and it came due last April. Of course, it couldn't be paid, because they're surviving by a thread, but Bain can't afford to let Guitar Center die during Mitt's run for president. My company relies heavily on Guitar Center and has monthly receivables in excess of $40K. If (when) they go down, a lot of highly dependent companies are going down with it. Very sad... Fender guitars will likely be one of them. Good ol' Bain.

Staples Surges On Report Of Possible Bain Capital Take Over

1. So we can expect an announcement

12. And mass firings?

2. It's another 'business miracle'!1!!1

3. Didn't they own Staples before....

6. I'm sure Staples made rich people richer and that's all that matters in this world. nt

7. yes, post bain, they are Failing

11. A Two-fer

4. People at Staples should probably start looking for new jobs

5. Any man who can buy all the Blackwater goons in the world is still someone to fear. nt

8. Bye bye Staples...

9. So...how long before the bankruptcy and closer?

10. Performance may be related to election

13. Staples bankrupt by 2013.

14. It's the Private Equity Merry Go Round

15. Guitar Center is another cadaver. They did a leveraged buyout with Bain and ended up with $650M in

16. your company better switch to cash in advance payments asap nt