Staples' European business generates annual sales of €1.7bn. Staples' will retain a 15% stake in the company.

Staples Inc has entered into an agreement with Cerberus Capital Management to divest a controlling stake in its European business, owned by Staples' indirect wholly owned subsidiary Staples Cyprus Intermediary Holdings, to Promontoria Holding 192 B.V., a Cerberus affiliate. Staples' European business consists of retail, contract, and online businesses in 16 countries generating aggregate annual sales of approximately €1,7bn, according to the companies involved. The closing of the transaction is anticipated for the first quarter 2017.

Under the terms of the agreement, the Cerberus affiliate Promontoria Holdings 192 is paying €50m for 85% of the issued and outstanding common shares, and 100 % of the preferred shares in Staples Solutions B.V., the newly formed target entity representing Staples' European business. At completion of the transaction, Staples shall be obligated to deliver Staples Solutions and its subsidiaries with unrestricted cash of €20m and pay Staples Solutions with an estimated €140m, relating to indebtedness, underfunded pension liabilities, working capital, and certain other adjustments.

"Upon closing of the transaction, the Staples Europe business will be separated into a privately-held company controlled by an affiliate of Cerberus. The new company will enter into a licensing agreement with Staples for the use of certain Staples intellectual property, including its brand, a global accounts agreement, and transition services agreement governing a variety of services for defined periods. The company will operate under the Staples banner name and other sub-brands in European markets, and its associates will continue to be employees of Staples Europe, which will maintain its headquarters in Amsterdam. Olof Persson, an executive with Cerberus' operations team and the former President and CEO of Volvo Group, will be appointed executive chairman of the new company," Staples announced.

Staples will retain a 15% equity interest in the divested business and will be represented on its board of directors.

In May 2016, Staples had announced a strategic plan under which it would focus on its North American businesses, reducing its emphasis on international operations. The company said it was exploring a potential sale of its European operations. The agreement with Cerberus followed the recent divestment of Staples' UK retail business to Hilco Capital Limited.

In connection with initial classification of the divested business as held for sale, Staples expects to recognise $220-240m in non-cash charges in the fourth quarter 2016, related to the impairment of long-lived assets, such as property, plant and equipment, associated with the divested business. Additional losses are expected to be recognised upon completion of the transaction, according to Staples.

 

Source : euwid-paper.com

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