Staples Jumps on Report That It's in Talks With Buyout Firms

(Bloomberg) -- Staples Inc., the office-supply chain that's pursuing an e-commerce makeover, rose the most in more than four years after the Wall Street Journal reported that it's in takeover talks.

The company is in early discussions with a small number of private equity firms, according to the newspaper. Staples currently has a market valuation of about $6.4 billion. With a typical takeover premium, the company could fetch a price of $7 billion or more, the Journal said.

The shares gained as much as 15 percent to $10 in New York, marking the biggest intraday increase since February 2013. They had been down 4.3 percent this year before the rally.

The talks come less than a year after Staples was thwarted in an attempt to make its own acquisition. A federal judge blocked Staples' $6.3 billion takeover of Office Depot Inc. in May, and the two sides walked away from the deal. Staples, based in Framingham, Massachusetts, declined to comment on the Journal report.

A buyout might allow the company to revamp its operations out of the public spotlight. The three-decade-old business is already at a crossroads, with sales declining and Amazon.com Inc. looming over its industry. As part of its turnaround plan, Chief Executive Officer Shira Goodman plans to boost its sales from internet orders to 80 percent by 2020 from 60 percent now.

Staples also aims to extract more growth from a market it considers neglected: small businesses. It's working on a national marketing campaign, adding business services and teaming up with the co-working company Workbar -- a partnership that is letting people set up offices within Staples stores.

The idea is to become a “partner for business,” Goodman said in an interview earlier this year. “We have to move the brand.”

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net.

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net.