ICYMI: A ‘Procurement Saint’s’ Take on the Staples-Office Depot Merger

services procurement

Earlier this week, Spend Matters Founder and Head of Strategy Jason Bush wondered how the late Thomas Stemberg, founder of Staples, would react to the proposed Staples-Office Depot merger. In the article, Procurement Saint: What Would Thomas Stemberg Think About the Staples-Office Depot Merger?, Jason wrote how Stemberg tried to buy Office Depot back in 1997 as a cost cutting measure both for the business and customers. The merger attempt, however, halted around the time Staples was aggressively trying to ramp up e-commerce sales.

But would Stemberg find today’s merger useful? And what about procurement organizations? Do they stand to benefit from the possible merger? According to Jason, the answer to these questions would mostly likely be, “No.”

“Fast-forward to today and everyone has an opinion on the case, even competitors, some of whom would like to see the deal go through for various reasons that are likely to benefit them,” Jason wrote. “But corporate procurement organizations, especially those in middle-market companies, are unlikely to see any savings from the merger in reduced prices and could very well face SKU-based increases down the line — a situation which Stemberg would not likely be excited over, given his premise for founding Staples in the first place.”

The Federal Trade Commission is currently reviewing Staples’ proposed $6.3 billion buyout of Office Depot. Staples’ current CEO, Ron Sargent, said the company’s “top priority is to get the deal done”. The FTC is expected to make a final decision on the deal by Dec. 8. A continuing concern of federal regulators is the Staples-Office Depot merger would eliminate competition in the market and leave companies that source office supplies with few options. We have written about such implications on our Chief Procurement Officer website.

But getting back to Jason’s article, just as CPOs may not be too thrilled with the possible Staples-Office Depot merger, Thomas Stemberg likely wouldn’t be either. Jason wrote:

“When Stemberg started Staples, he clearly set out to become a saint for procurement and price transparency, a person to be lauded for his contribution to reigning in indirect costs for companies of all sizes. OK, he probably wanted to make a little money, too. But where the business ends up could very well cloud the legacy he set out to create in empowering small and medium-sized businesses to get the best possible deals on office products — and maybe even larger firms, as well.”

Make sure to check out the full article: Procurement Saint: What Would Thomas Stemberg Think About the Staples-Office Depot Merger?

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