Dissecting a blocked merger.(Staples and Office Depot denied merger)(includes related article on other office stores' reactions to news)

HFN: The Weekly Newspaper for the Home Furnishing Network, July, 1997 by Owens, Jennifer

A federal judge ruled in favor of the Federal Trade Commission and blocked the merger of Office Depot and Staples. The government argued that the merger would reduce competition and cause prices to rise by up to 10%. The chains countered by saying the merger would allow them to cut costs and drop prices. The merged firm would have had a total of $11 billion in sales annually and 1,100 stores. Many in the retail industry were surprised about the decision.

With the apparent death of the super-merger between Staples and Office Depot, analysts say the judge's decision to block the $4 billion deal should not affect any future category-killer mergers or acquisitions.

The reason, according to analysts, is that few future deals will combine the same elements which hurt the...

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