The ACCC will later this month announce its decision on the proposed acquisition of the Australian OfficeMax business by Platinum Equity, the company that bought the Australian operation of Staples earlier this year.
A complication has been another offer for the business.
Any deal that further concentrates the ownership of B2B stationery sales in Australia is problematic for a newsagency channel that already has challenges with stationery. Indeed I think the prospective merger of the Staples and OfficeMax businesses is something that should have prompted a submission from GNS or even newsagents with big stationery business.
The activity is a reinforcement of how much stationery is in play in Australia. This indicates more disruption ahead for this product category. Disruption can be good if you leverage it to your commercial advantage.
The disruption in this category is not confined to our shores with major activity in the US
Stationery News has more perspective on the Australian moves:
Recent media reports quote “industry sources” who estimate the merger of Staples and OfficeMax would give the group “90 per cent of the B2B market in Australia and New Zealand – 10 times more than nearest rivals COS and Lyreco.”
As Stationery News has stated before, the figure is off-target – a combined Staples/OfficeMax business would have estimated revenues of between $1 billion and $1.2 billion. This compares with an estimated figure of $2 billion for Officeworks (consumer and SME sales) and a combined figure of $500 million plus for dealer groups Office Brands, Office Choice and ASA Australia.
Hi Mark,
A few thoughts on this proposed merger.
1. That 90% market share figure is probably correct if you look at the market for large enterprise customers and the public sector, where Staples and OfficeMax are the dominant players. I’m not sure anyone has said that combined they’ll have a 90% share of the whole B2B market.
2. If the ACCC look at this customer category in isolation – as their peers in the USA did last year when they blocked the merger between Staples and Office Depot – then there is a good chance that the Staples/OfficeMax deal will also be blocked or come with conditions that Platinum would probably not accept.
3. There is another bidder for OfficeMax in the form of independent reseller COS. It is unlikely that a COS/OfficeMax combination would be blocked by the ACCC because Staples would remain as a major competitor.
4. I’m not sure that either of the above transactions would have a direct impact on the newsagency channel as the target customer is probably different in most cases. However, as the reseller channel shrinks, suppliers are most likely looking for other outlets for their products, and newsagencies could be one of those channels.
Best regards,
Andy