Investor buys Staples stake and ups Home Depot holding

Activist investor Starboard Value LP has bought a 5.1 percent stake in Staples Inc. and increased its holding in Office Depot Inc. to 9.9 percent, following suggestions from some analysts that the two companies should merge.

The stake-building by Starboard, a hedge fund led by activist investor Jeffrey Smith, was first reported by the Wall Street Journal, which said the move could raise pressure for the two office-supply retailers to combine, the newspaper said citing sources.

In September, a Credit Suisse analyst, Gary Balter, said Staples should buy Office Depot to fend off competition from online retailers.

Smith has pressured Office Depot to improve operations since taking a stake in the company in 2012. The fund owned 8.6 percent of Office Depot's outstanding shares as of June 30, according to data compiled by Bloomberg.

To contact the reporter on this story: James Boxell in London at jboxellbloomberg.net To contact the editors responsible for this story: Jacqueline Simmons at jackiembloomberg.net Robert Valpuesta