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Office Depot owner ODP Corp. (ODP-Q) said on Tuesday it rejected bigger-rival Staples’ more than $2-billion takeover offer and instead proposed merging only the consumer-focused retail operations of the two office-supplies companies to avoid regulatory scrutiny.

Staples’ earlier attempts at combining the companies, in 1996 and 2016, were foiled as antitrust enforcers deemed the deal would mean higher stationery prices and reduced competition for countrywide contracts for office supplies.

ODP, owner of Office Depot, OfficeMax and office IT service provider CompuCom, said it preferred a sale of its retail and e-commerce operations to Staples, or a joint venture, to a full takeover. Staples, a public company when the first offers were made, was taken private by Sycamore Partners in 2017.

“We believe the regulatory risk of pursuing a retail-only transaction to be significantly lower than your proposed transaction,” ODP chairman Joseph Vassalluzzo wrote in a letter to a Sycamore official.

Mr. Vassalluzzo said ODP does not plan to “engage in a transaction that, as history has shown, would likely result in a prolonged and expensive regulatory review process with no guarantee of success.”

ODP also said the sale of CompuCom was already under way following a strategic review announced in November. In its offer last week, Staples said it was ready to raise the bid if ODP begins a sale of its commercial business unit or divests its CompuCom business, an IT solutions provider.

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