Starboard Buys Staples Stake, Boosts Office Depot Holdings

Dec 11 2014 | 10:15am ET

Activist hedge fund Starboard Value may be eyeing a marriage of the two largest office-supply retailers in the U.S.

The New York-based hedge fund has opened a roughly 6% stake in Staples Inc., while also increasing its stake in rival Office Depot Inc. to about 10%. Starboard did not indicate its plans in the regulatory filings announcing the positions.

Starboard last year fought a proxy battle with Office Depot, eventually settling for three seats on its board. In September, Starboard CEO Jeffrey Smith stepped down as a director.

In September, Credit Suisse estimated that a combined Staples-Office Depot could close about half of their 3,000 stores for a savings of more than $1.4 billion per year—the equivalent of their combined estimated profit. And while the Federal Trade Commission in 1997 prevented the two from merging, last year the regulator permitted the union of Office Depot with OfficeMax without insisting on any store closures.

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