Office Depot’s stock rose about 11 percent Thursday amid speculation it might strike a deal with online marketplace giant Amazon to earn federal regulators’ approval of its merger with rival Staples.
The New York Post fueled the speculation on Thursday when it reported “a prominent activist investor” has taken a stake in Office Depot in the belief the company might be on the verge of selling its corporate business unit to Amazon. The Post identified the source as “a person familiar with the investor’s thinking.”
In a hearing Wednesday, Amazon was identified as a “critical” witness in the court case pitting Staples and Office Depot — which are trying to complete a $6.3 billion merger — against the Federal Trade Commission.
In December, the FTC filed suit in U.S. District Court in Washington, D.C. to challenge the merger. The regulatory agency claims a merger would reduce competition and drive up prices in the corporate office supply market.
Staples argues that ample competition exists, including from Amazon, which started a business unit in April 2015, and discount stores Walmart and Costco.
Thursday’s stock surge may indicate some investors are betting on a possible deal between Office Depot and Amazon, which might persuade the FTC to approve the Staples-Office Depot combination.
But retail analyst David Marcotte said Amazon often becomes a focus of speculation when companies need a “magical white knight.”
“Every single retailer who is trouble is being ‘bought out by Amazon,'” said Marcotte, of Kantar Retail in Boston, pointing to reports a year ago that Amazon was in talks with Radio Shack, which had filed for bankruptcy protection.
The retailers met with the FTC last week to discuss a potential settlement, but Staples’ lawyer Diane Sullivan reported to the court at a pre-trial conference Wednesday that “nothing’s come of that.”
FTC lawyer Tara Reinhart told the court Wednesday the only settlement that the agency is willing to consider is Staples and Office Depot “divesting a going concern,” meaning a company that can continue operating on its own.
A hearing on the FTC’s preliminary injunction to keep Staples and Office Depot from closing on the merger is scheduled to begin Monday.