Business World

Office supply retailer Staples Inc (SPLS.O: Quote, Profile, Research) made an unsolicited 2.5 billion euro ($3.7 billion) bid for Corporate Express (CXP.AS: Quote, Profile, Research) on Tuesday after unsuccessful attempts to hold friendly merger talks with the Dutch office supply company.

Corporate Express rejected the offer, saying it undervalued the company.

A deal, which has been rumored for months, would allow Staples to cut costs and expand its market share and product line in the United States, where Corporate Express generates around 50 percent of its revenue, analysts said.

“Strategically, the acquisition would provide Staples with (a) significant increase in scale in North America, as well as a new contract platform in the (European Union), Australia and New Zealand markets,” said Colin McGranahan, an analyst with Sanford Bernstein.

Hedge funds and investors have pressed Corporate Express, one of the world’s largest office products wholesalers, to seek a buyer or break apart the company due to problems with shrinking sales and margins in the United States, its key market.

Yet the company recently added new management and said earlier this month that it had reversed slumping U.S payday loans. sales in the last quarter of 2007. It also reiterated its desire to continue as an independent firm.

Earlier this month, Corporate Express denied it was in talks with Staples.

In a letter to Corporate Express, Staples wrote: “Over the last several months, we have made repeated attempts to engage in discussions with you concerning a business combination, and we have been disappointed that you have not been willing to do so. 

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