|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
"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
"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
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:
Jean Papagni, 508/370-8727
Patt Borgman, 847/634-6654
John Mahoney, 508/370-7298