Some or all of Staples may be up for sale again. Private equity firm Sycamore Partners acquired the struggling office supply retail giant for $6.9 billion in 2017. Now, the PE firm is looking to "take most of its cash out of Staples through a recapitalization that will saddle the company with roughly $1 billion of additional debt," according to Bloomberg.
Longer term, Sycamore may consider a complete exit from the office supply retailer -- potentially through an IPO in the next year or so, the report adds. ChannelE2E has not independently confirmed the report. Still, the IPO chatter could be a test balloon designed to attract potential Staples suitors to Sycamore's negotiating table, sources tell ChannelE2E.
Staples has evolved quite a bit since the initial Sycamore investment in 2017. Among the key moves:
- More acquisitions: The retailer and/or its PE parent have since moved to acquire HiTouch Business Services, Essendant and DEX Imaging.
- Coworking: The company has experimented with coworking concepts for small business customers -- though a partnership with Workbar on that front ended in February 2019.
Staples and Managed IT Services: Missed Opportunities
Staples has also dabbled in the managed IT services market but the moves didn't always pan out. The company in 2007 acquired Thrive Networks, an MSP that had momentum in the New England at the time. The were even rumors involving a potential RMM (remote monitoring and management) buyout in the 2013 timeframe or so.
Staples never really figured out how to unlock Thrive’s full potential. By 2014, Mitel acquired the Thrive Networks business from Staples for an undisclosed sum. And these days, Thrive is owned by M/C Partners -- and thriving again.
Still, the biggest potential Staples move of all — a proposed 2016 merger with Office Depot — didn’t pan out amid regulatory and competitive concerns.
Private Equity and Retailers: A Cautionary Tale
Meanwhile, rivals and potential investors will be watching Sycamore Partners' next moves for Staples closely. Loading a retailer with more debt hasn't exactly been a winning strategy in recent years -- as the Sears and Toys R Us implosions have taught observers.
As a privately held company, Staples' own financial performance remains undisclosed. But we'll be listening and watching closely for financial clues as chatter about the Sycamore-Staples strategy potentially spills into public markets.