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Staples Acquires Essendant, Counters Amazon Business

Staples has acquired Essendant Inc., a $5 billion office solutions provider that both completes and cooperates with Amazon Business.

Essendant distributes more than 170,000 different items, including janitorial and breakroom supplies, technology products, traditional office products, industrial supplies, cut sheet paper products, automotive products and office furniture.

Frankly, that sounds a lot like Amazon Business -- the fastest-growing piece of the Jeff Bezos empire. Amazon Business -- a supplier of office products to 55 of the Fortune 100 companies, more than half of the 100 biggest hospital systems and more than 40% of the 100 most populous local governments, the ecommerce giant says.

Amazon Business generates $10 billion in annual sales, but 50 percent of those revenues involve third-party sellers. Essendant fits somewhere in that mix, having opened an online store within the Amazon Business portal.

Essendant is a giant in its own right. The company has 61 distribution centers, and can ship most products overnight to more than 90 percent of the U.S.

Consumer Retailers Pursue B2B, IT Services

Staples, Office Depot and other retailers have taken multiple steps to diversify beyond their traditional business models. For instance:

Now, Staples is acquiring Essendant for $996 million including net debt. The deal is worth $482.7 million in cash, The Wall Street Journal says. Genuine Parts, another potential Essendant buyer, declined to pursue a bidding war for the business.

Still, the Staples-Essedant deal could face significant shareholder opposition, with Essendant’s largest shareholder, Pzena Investment Management, arguing the transaction undervalues the company, Barron's reports.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.