|Staples To Purchase Quill for $685 Million; Accretive to EPS Starting in 1998|
BW1092 APR 07,1998 5:07 PACIFIC 08:07 EASTERN
WESTBOROUGH, Mass. and LINCOLNSHIRE, Ill.--(BUSINESS WIRE)-- April 7, 1998--Staples, Inc. (NASDAQ:SPLS) today announced a definitive agreement to purchase Quill Corporation ("Quill"). Staples will issue about 30 million shares at a combination of fixed and variable prices which would equate to a purchase price of about $685 million. The purchase price includes approximately $580 million for ongoing operations and $105 million for cash in excess of operating cash and real estate owned by the principals.
The transaction is subject to customary closing conditions, including Hart-Scott-Rodino clearance, and is expected to be completed during the summer.
The company expects the purchase to be accretive to earnings, adding about $.01 per share before estimated one-time charges of $32 million in 1998, and about $.02 per share in 1999. The transaction will be accounted for as a pooling of interests.
Quill of Lincolnshire, IL, is a privately held company which sells office supplies to businesses in the United States via a mail order catalog, the internet and outbound telemarketing. Quill recorded $550 million in annual sales in 1997 and has over 1,200 employees.
Staples also has a delivered office products business, called Staples Contract and Commercial, which recorded about $1 billion in sales in 1997. Staples Contract and Commercial and Quill will continue to be run as separate businesses. Quill will operate under its own name, retain its Quill brand name, and maintain its present headquarters and its distribution centers. Jack Miller will continue as president and CEO, reporting to Ron Sargent, president of Staples' North American operations.
The addition of Quill will increase Staples' presence in the large, highly fragmented market for delivered office products, and result in lower prices to both Staples and Quill customers. These lower prices will result from significant operating and purchasing efficiencies, particularly in product costs, distribution, catalog production and paper buying, circulation costs, and private label credit for customers.
Quill enjoys a great reputation with customers and has world class marketing skills, particularly in the use of data-based marketing techniques that allow Quill to target its marketing efforts in a highly effective and efficient manner.
"The merger with Staples will allow us to continue to grow our domestic business rapidly and to expand to overseas markets where the opportunities for direct marketing are even greater than in the United States," said Jack Miller, president and CEO of Quill. "We will absolutely continue our commitment to everyday low prices and our outstanding customer service, as well as keeping Quill a great place to work."
"Staples' and Quill's direct marketing operations are complementary, and Quill's highly developed direct marketing skills will enhance Staples' ability to address the delivered office products market," said Thomas G. Stemberg, chairman and chief executive officer of Staples. "Staples Contract and Commercial has grown rapidly by taking advantage of the Staples network of stores. With Quill, we can capitalize on its established brand and the strong management in direct marketing and customer service. I also believe we will realize even greater savings from business synergies than our financial models show right now, and we will pass those savings along to our customers."
"We also believe Quill's approach to direct marketing is well suited for Europe," continued Mr. Stemberg, "And we expect to launch Quill in the United Kingdom in the near future."
Staples, Inc. is a $5 billion retailer of office supplies, furniture and technology to businesses from home based businesses to Fortune 50 companies in the United States, Canada, the United Kingdom and Germany. Staples, headquartered near Boston, Mass, pioneered the office superstore concept and today is the largest operator of office superstores in the world. The company, which has grown earnings per share at over a 40% compounded rate over the last five years, has over 30,000 employees serving the business customer through 761 office superstores, mail order catalogs and a contract business.
More information on Staples may be obtained from the Company's Investor Relations department by dialing (800) INV-SPL1 or from the Company's website at http://www.staples.com.
In the past 42 years, Quill has grown from a one man start-up with a phone in a chicken store to an industry leader with sales in 1998 estimated to be well over $600 million, over 1,200 employees, and nine distribution centers across the United States. Under the guidance of the three Miller brothers -- Jack, president and CEO; Harvey L., secretary; and Arnold, treasurer -- Quill has developed into a leader in business-to-business direct marketing with one of the most efficient, customer service-oriented distribution systems in the country.
More information on Quill may be obtained from the company's website at http://www.quillcorp.com, which features company information, the full line Quill catalog and a highly efficient electronic ordering system.
Certain information presented within this press release may constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, which are discussed in the Company's most recent filing on Forms 10-K and 10-Q on file with the Securities and Exchange Commission.
CONTACT: Media contacts: Staples, Inc. Jean Papagni, 508/370-8727 or Quill Corporation Patt Borgman, 847/634-6654 or Investor contacts: Staples, Inc. John Mahoney, 508/370-7298