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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 7, 2016
STAPLES, INC.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction
of incorporation)
0-17586
(Commission
File Number)
04-2896127
(IRS Employer
Identification No.)
Five Hundred Staples Drive, Framingham, MA
(Address of principal executive offices)
01702
(Zip Code)
Registrant's telephone number, including area code: 508-253-5000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On December 7, 2016, Staples, Inc. (the “Company”) and its indirect wholly-owned subsidiary Staples Cyprus Intermediary
Holdings Ltd. (“Seller”) entered into a Signing Protocol with Promontoria Holding 192 B.V. (“Purchaser”), an affiliate of Cerberus
Capital Management, L.P., pursuant to which Purchaser made a binding offer, upon the terms and subject to the conditions set forth in
the Signing Protocol and the form of Sale and Purchase Agreement appended to the Signing Protocol among Purchaser, Staples
Solutions B.V. (a newly formed target entity), the Company and Seller (the “SPA”), to purchase the retail, contract and online
businesses of the Company and its affiliates in Europe (subject to certain exceptions described in the SPA and excluding the
previously owned UK retail business, the “Divested Business”), through the sale of shares in Staples Solutions B.V. as set forth in the
SPA and further described below. The acceptance of the offer and the entry into the SPA pursuant to the Signing Protocol is subject to
completion of certain European works council consultation procedures and applicable waiting periods required by relevant European
legislation and practice, as described in the Signing Protocol.
The SPA provides for the sale by Seller to Purchaser of 85% of the issued and outstanding common shares, and 100% of the
preferred shares (such common shares together with the preferred shares, the “Shares”), in Staples Solutions B.V., upon the terms and
subject to the conditions set forth therein, with Seller to retain the remaining 15% of the issued and outstanding common shares of
Staples Solutions B.V. Prior to completion of the transactions contemplated by the SPA (“Completion”), Seller will cause the
Divested Business to be contributed to Staples Solutions B.V. The purchase price to be paid by the Purchaser for the Shares is €50.0
million. At Completion, Seller shall be obligated to deliver Staples Solutions B.V. and its subsidiaries with an amount of unrestricted
cash equal to (i) €20.0 million, plus (ii) an amount calculated at Completion pursuant to certain adjustments in the SPA and currently
estimated to be approximately €140.0 million in the aggregate (the “Estimated Unrestricted Cash Adjustment Amount”), relating to
indebtedness, underfunded pension liabilities, working capital, and certain other adjustments. The Estimated Unrestricted Cash
Adjustment Amount may vary significantly from the actual amount calculated as of Completion, as a result of the operations of the
Divested Business prior to Completion.
The Signing Protocol and the SPA contain various covenants of Seller, including, among others, covenants providing for
Seller and its affiliates to conduct the Divested Business in all material respects in the ordinary course during the period between the
execution of the Signing Protocol and Completion, and in the case of the SPA, restricting Seller and its affiliates from conducting
business operations or acquiring competing businesses in certain territories following Completion. The Company has also agreed,
among other things, not to solicit proposals, enter into discussions or negotiations, or enter into agreements or understandings relating
to alternative transactions, or to communicate with third parties or provide non-public information in connection with such alternative
transactions, as set forth in the Signing Protocol and the SPA.
The SPA contains various representations and warranties of each party, including in the case of the Seller as to the state of
the Divested Business as at signing of the Signing Protocol and at Completion. The SPA provides for Seller to indemnify and hold
Purchaser and certain of its affiliates harmless, as further described and defined in the SPA, against any and all liabilities, claims,
losses, and damages in relation to, resulting from or arising out of, among other things, breaches of warranties, breaches of covenants
and certain other specified excluded liabilities including certain ongoing legal proceedings and obligations to indemnify third parties,
Seller’s transaction expenses, certain indebtedness, and other known and unknown excluded liabilities related to pre-Completion
business operations. Certain breaches of warranties are subject to specific limitations on Seller’s liability, as set forth in the SPA.
Completion is subject to customary conditions for a transaction of this nature.
Both the Signing Protocol and the SPA contain certain termination rights for both the Seller and Purchaser, including in the
case of the Signing Protocol if the SPA is not executed on or before May 23, 2017 (the “Offer Termination Date”), and in the case of
the SPA if Completion has not occurred on or before May 27, 2017, or in each case such later dates as may be agreed by the parties.
The Signing Protocol also provides that, if (i) all of the employment consultations (as defined in the Signing Protocol) have
not been complied with by the Offer Termination Date as a result of a breach of certain of Seller's obligations under the Signing
Protocol; (ii) such employment consultations have been complied with and completed in accordance with applicable law and the
Signing Protocol and the Seller fails to execute the SPA; or (iii) Seller or Staples Solutions B.V. fail to satisfy the condition for
Completion set forth in the SPA relating to performance of specified covenants for operation of the Divested Business, Seller shall, in
the absence of a specific performance remedy, pay to Purchaser an amount in cash equal to the sum of (A) €10.0 million and (B) fifty
percent of Purchaser’s fees, costs and expenses in connection with the proposed transaction (provided the amount to be reimbursed
shall not exceed €3.0 million), as set forth in the Signing Protocol. The Company has also guaranteed the obligations of Seller under
the SPA and the Signing Protocol.
At Completion, the SPA provides that the parties would implement a shareholders’ agreement for Staples Solutions B.V., a
transitional services agreement relating to the migration of resources to the Divested Business, a global account agreement relating to
the servicing, management and procurement of shared customers, and an Intellectual Property License Agreement (“IPLA”). The
IPLA provides that a wholly-owned subsidiary of Staples Solutions B.V. will receive a sole and exclusive, royalty-free, fully paid-up,
assignable (as set forth in the IPLA), sublicensable (as set forth in the IPLA), perpetual, non-terminable and irrevocable license to use
certain intellectual property in the relevant territory and to conduct the Divested Business. The licensed intellectual property includes
trademark registrations in such territory for the Staples brand name and logo.
Item 2.06 Material Impairments.
Upon execution of the Signing Protocol described above, the Company concluded the Divested Business met the criteria to
be classified as held for sale in the Company’s consolidated financial statements. In connection with the initial classification as held
for sale, the Company expects to recognize non-cash charges in the range of approximately $220 million to $240 million in the fourth
quarter of 2016 related to the impairment of long-lived assets associated with the Divested Business. The long-lived assets primarily
consist of property, plant & equipment. As disclosed in the Company’s Quarterly Report on Form 10-Q for the third quarter of 2016,
the Company expects to recognize additional losses upon Completion.
Item 7.01 Regulation FD Disclosure.
On December 7, 2016, the Company and Cerberus Capital Management, L.P. issued a joint press release announcing the
execution of the Signing Protocol described above. A copy of the press release is attached as Exhibit 99.1 attached hereto and is
incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
The exhibit listed on the Exhibit Index immediately preceding such exhibit is filed as part of this Current Report on Form
8-K.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this document regarding the proposed disposition of the Divested Business, the expected timetable for
completing the transaction, future financial and operating results, costs and benefits of the transaction, and any other statements about
the Company’s future expectations, beliefs, goals, plans or prospects constitute forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements
containing “believes,” “anticipates,” “plans,” “expects,” “may,” “will,” “would,” “intends,” “estimates” and similar expressions)
should also be considered to be forward looking statements. There are a number of important factors that could cause actual results or
events to differ materially from those indicated by such forward looking statements, including: the ability to consummate the
transaction; the risk that employee works councils do not approve the transaction; the risk that regulatory approvals required for the
transaction are not obtained; the risk that the other conditions to the completion of the transaction are not satisfied; potential adverse
reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the
transaction; uncertainties as to the timing of the transaction; competitive responses to the proposed transaction; the ability to
successfully migrate the Divested Business’ operations and employees; unexpected costs, charges or expenses resulting from the
transaction; litigation relating to the transaction; the inability to retain key personnel; any changes in general economic and/or industry
specific conditions; and the other factors described in the Company’s Annual Report on Form 10-K for the year ended January 30,
2016 and its subsequent Quarterly Reports on Form 10-Q, each filed with the Securities and Exchange Commission. The Company
disclaims any intention or obligation to update any forward looking statements as a result of developments occurring after the date of
this document.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date:
December 7, 2016
Staples, Inc.
By: /s/ Michael T. Williams
Michael T. Williams
Executive Vice President,
General Counsel and Secretary
Exhibit Index
Exhibit No.
99.1
Description
Press Release dated December 7, 2016.
Exhibit 99.1
CERBERUS CAPITAL MANAGEMENT TO ACQUIRE STAPLES’ EUROPEAN BUSINESS
FRAMINGHAM, MA and NEW YORK CITY, December 07, 2016 - Staples, Inc. (NASDAQ: SPLS) and
Cerberus Capital Management, L.P. (Cerberus) announced today that Staples and Cerberus have entered into an
agreement in relation to the sale of a controlling interest in Staples’ European operations to a Cerberus affiliate.
Staples’ European business consists of retail, contract, and online businesses in 16 countries generating
aggregate annual sales of approximately €1.7 billion. Staples is retaining a 15 percent equity interest in the
business and will be represented on its board of directors following the closing of the transaction. In accordance
with applicable law, Staples will now consult relevant European works councils. Subject to these consultations
and satisfaction of other conditions, the parties anticipate closing the transaction during the first quarter of
Staples’ fiscal 2017 year.
“One of our top strategic priorities has been to narrow our geographic focus on North America, and this is an
important step toward simplifying our operations and better positioning Staples for sustainable long-term
growth,” said Shira Goodman, Chief Executive Officer and President, Staples, Inc. “We believe that working
with Cerberus will help enable the future success of the Staples Europe business, benefiting our associates and
customers in the region.”
“We intend to instill a keen sense of urgency, focus, and commitment throughout the entire Staples Europe
organization, enhance the company’s competitive position across its markets and channels, and return the
business to growth by capitalizing on its many assets, including its well-recognized brands, strong customer
relationships, dedicated sales force, advanced distribution and IT infrastructure, comprehensive pan-European
footprint, and talented management and associates,” said Steven F. Mayer, Co-Head of Global Private Equity
and Senior Managing Director of Cerberus. “Our strategy is to invest in a variety of initiatives designed to
strengthen Staples Europe’s position as the leading provider of solutions to small, mid-sized, and large
businesses in Europe, including sales force expansion, further diversification of products and services beyond
office supplies, and next-generation technologies. Our unrelenting focus throughout the organization will be on
satisfying our customers and on operational execution.”
Upon closing of the transaction, the Staples Europe business will be separated into a privately-held company
controlled by an affiliate of Cerberus. The new company will enter into a licensing agreement with Staples for
the use of certain Staples intellectual property, including its brand, a global accounts agreement, and transition
services agreement governing a variety of services for defined periods. The company will operate under the
Staples banner name and other sub-brands in European markets, and its associates will continue to be
employees of Staples Europe, which will maintain its headquarters in Amsterdam. Olof Persson, an executive
with Cerberus’ operations team and the former President and CEO of Volvo Group, will be appointed executive
chairman of the new company.
The agreement with Cerberus follows Staples’ recent announcement of the sale of its UK retail business to
Hilco Capital Limited, which also aligned with Staples’ new strategic direction of right-sizing its international
business.
Barclays is acting as exclusive financial advisor to Staples. Clifford Chance LLP is acting as legal advisor to
Staples. Kirkland & Ellis LLP and Linklaters LLP are acting as legal advisors to Cerberus.
About Staples, Inc.
Staples helps small business customers make more happen by providing a broad assortment of products,
expanded business services and easy ways to shop - in stores, online via mobile or through social apps.
Staples Business Advantage, the business-to-business division, caters to mid-market, commercial and
enterprise-sized customers by offering a one-source solution for the products and services they need, combined
with best-in-class customer service, competitive pricing and a state-of-the-art ecommerce site. Headquartered
outside of Boston, Staples, Inc. operates throughout North and South America, Europe, Asia, Australia and New
Zealand. More information about Staples (NASDAQ: SPLS) is available at www.staples.com .
About Cerberus Capital Management, L.P.
Established in 1992, Cerberus Capital Management, L.P. is one of the world’s leading private investment firms.
Cerberus has more than US $30 billion under management invested in four primary strategies: operational
private equity, both control and non-control; distressed securities and assets; commercial mid-market lending;
and real estate-related investments. From its headquarters in New York City and network of affiliate and
advisory offices in the U.S., Europe and Asia, Cerberus has the on-the-ground presence to invest in multiple
sectors, through multiple investment strategies, in countries around the world.
Media Contacts:
Staples, Inc.
Cerberus
Mark Cautela
Liz Micci
(508) 253-3832
(646) 495-2702
[email protected]
[email protected]