|Staples Plans to Combine Catalog, Staples.com Operations; Also Seeks Shareholder Approval to Fold Staples.com Stock Into Staples Inc. Stock|
FRAMINGHAM, Mass.--(BUSINESS WIRE)--March 20, 2001--Staples, Inc., (NASDAQ: SPLS) today announced plans to merge its small-business and consumer catalog operation, called Direct, with Staples.com in order to better serve the needs of its customers - many of whom are cross-channel shoppers who make purchases from both the catalog and the e-commerce business.
As a result of this planned integration, Staples is withdrawing its planned initial public offer of Staples.com tracking stock and, subject to shareholder approval, will convert Staples.com stock into Staples, Inc., common stock.
Jeanne Lewis, formerly president of Staples.com, has been promoted to the new position of president of Direct.com and will lead the unified Direct and Staples.com business.
"The integration of Staples.com with our catalog business will be a home run both for our customers and our shareholders," said Thomas G. Stemberg, chairman, CEO and founder of Staples, Inc. "The vast majority of customers who migrate from Direct to Staples.com also continue to buy from Direct. As a result, they buy more overall from Staples than they did as one-channel shoppers. By combining Direct and Staples.com, we'll be able to operate more effectively and efficiently with a unified merchandising team, a unified marketing team and a unified customer support team. The integration also will allow us to eliminate the administrative costs that come from operating separate business units."
Staples has found that its shoppers are increasingly purchasing through multiple channels, with many customers shopping at the Staples stores, catalog and Staples.com. Customers who shop at Staples stores and through its catalogs spend 2.5 times as much per year as those who only shop Staples stores. Customers who shop all three channels - Staples stores, catalog and Staples.com - spend on average 4.5 times as much per year as customers who only shop the stores.
In order to convert Staples.com stock into Staples common stock, shareholders must approve the measure at the annual meeting, to be held this spring. Under the terms of the proposal, Staples would convert each issued and outstanding share of Staples.com stock into 0.4396 share of Staples RD stock, currently the name for the company's common stock. The measure, if approved, would simultaneously rename Staples RD stock as Staples common stock. Staples.com stock options would be converted into Staples common stock options using the same formula.
In connection with this transaction, Staples.com was advised by Wit SoundView Corporation and Staples was advised by Thomas Weisel Partners LLC. The move to seek shareholder approval to convert Staples.com stock was approved by the board of directors at a recent board meeting. The company is filing a Preliminary Proxy Statement with the Securities and Exchange Commission in connection with this transaction.
Staples, Inc., is an $11 billion retailer of office supplies, furniture and technology to consumers and businesses from home-based businesses to Fortune 500 companies in the United States, Canada, the United Kingdom, Germany, the Netherlands and Portugal. Headquartered outside Boston, Staples invented the office superstore concept and today is the largest operator of office superstores in the world. The company has over 50,000 employees serving customers through more than 1,300 office superstores, mail order catalogs, e-commerce and a contract business. More information about the company is available at http://www.staples.com.
Certain information contained in this news release constitutes forward looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors including risks related to Staples' ability to compete in its highly competitive market, Staples' ability to continue to successfully open new stores, Staples' quarterly operating results being subject to significant fluctuation, Staples' stock price fluctuating based on the expectations of professional securities analysts, the strain on operations due to Staples' rapid growth which can affect operating results, the ability of Staples' foreign operations and Staples.com to become profitable and the ability of Staples to obtain adequate future financing. Additional information concerning these factors is contained in Staples' Quarterly Report on Form 10-Q dated December 11, 2000, which is on file with the Securities and Exchange Commission.