Staples gets EU approval for acquisition of Office Depot

NEW YORK (AP) - Staples has received European approval for its buyout of Office Depot and in exchange, said Wednesday that it would split off some of its businesses in Europe to allay monopoly fears.

The European Union gave its support to the deal on the condition that Staples Inc. divest Office Depot's European contract business and all of its operations in Sweden. Staples said that it will also divest Office Depot's retail, online and catalog operations in Europe.

"This is a significant step," Staples Chairman and CEO Ron Sargent said in a written statement Wednesday.

But the $6.3 billion still needs approval at home in the U.S., which is far from assured.

Federal regulators in December rejected Staples' offer to sell $1.25 billion in contracts to work around anti-trust issues. The Federal Trade Commission believes that the combination of the last two major office supply retailers would throttle competition and allow the new company to dictate the price of supplies.

Staples and Office Depot Inc. recently extended this week's deadline to complete the deal by more than three months, to May 16, giving it more time to argue its case.

The office supply sector has been upended by technological changes in the work place, as well as a slow economic recovery. The industry had already undergone a notable consolidation with the merger three years ago of Office Depot, based in Boca Raton, Florida, and OfficeMax.

Office Depot and Staples now say that competition, with the arrival of major online operators like Amazon.com, has become even more severe, and that the FTC is contradicting itself because it said that the office supply market was highly competitive only three years ago.

Staples, based in Framingham, Massachusetts, said that it is still willing to negotiate with the FTC and that it may pursue legal action to close the deal.