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The Essendant-S.P. Richards-Staples M&A battle took the next step today, as Essendant (NASDAQ: ESND) notified Genuine Parts Co. (NYSE: GPC) that it seeks to accept a rival offer from Staples, Inc. MDM's analysis in May reported that Essendant and Genuine Parts Company entered into a merger agreement on April 10, 2018 to combine Essendant and GPC’s S.P. Richards business in a deal valued at $680 million, including a one-time cash payment to GPC of $347 million. The merged business products wholesaler would have pro forma 2017 net sales of about $7 billion and more than $200 million in adjusted EBITDA.
Essendant said today that its Board of Directors has determined that the most recent proposal from Staples, Inc. to acquire all of the outstanding shares of Essendant common stock for $12.80 per share in cash constitutes a “Superior Proposal” as defined in Essendant's previously announced merger agreement with Genuine Parts Company (NYSE: GPC).
Staples submitted an unsolicited offer on April 17, 2018, which it reaffirmed on September 4, 2018, to acquire all of the outstanding shares of Essendant common stock for $11.50 per share in cash. As part of its current proposal, Staples delivered to Essendant a merger agreement signed by Staples.
Essendant and GPC entered into a definitive merger agreement on April 12, 2018, in which Essendant agreed to combine with GPC’s S.P. Richards business.
Essendant said it is delivering notice to GPC of the Board’s determination that the Staples proposal constitutes a Superior Proposal and intends to terminate the S.P. Richards merger to enter into the merger agreement with Staples. Under the terms of the S.P. Richards merger agreement, such notice commences a three business day period, during which the Essendant Board may not change its recommendation that shareholders vote in favor of the S.P. Richards transaction nor terminate the S.P. Richards merger agreement, the company said. During this period, GPC has the right to propose amendments to the terms of the S.P. Richards merger agreement.
“There can be no assurance that the Staples proposal will result in the consummation of a transaction. Further, there can be no assurance that GPC will propose any adjustments to the S.P. Richards merger agreement. At this time, Essendant remains subject to the S.P. Richards merger agreement and the Essendant Board has not changed its recommendation with respect to the S.P. Richards transaction, nor has it made any recommendation with respect to the Staples proposal,” Essendant said in a statement released September 10.