Judge Blocks Staples-Office Depot Merger; Stocks Dive – Investor’s Business Daily

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Staples (SPLS) and Office Depot (ODP) terminated their merger plans after a D.C. federal judge late Tuesday granted an FTC injunction to block the deal. Shares of the office supply retailers plunged in late trading.

Judge Emmet Sullivan said that the FTC had shown a “reasonable probability” that the merger would “substantially impair competition” for office supply sales to large business customers.

Staples stock dived 10% in late trading, while Office Depot plunged 26%.

Staples and Office Depot had argued that competition with Amazon.com (AMZN), Costco (COST), Wal-Mart (WMT) and others would provide sufficient competition. The FTC, which hailed the ruled, said Amazon and other office supply sellers did not have sufficient heft with big corporations.

“We are extremely disappointed that the FTC’s request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case,” Staples CEO Ron Sargent said in a statement.

Staples will pay a $250 million break-up fee to Office Depot.