Office Depot tumbles on report regulators will block Staples merger

Shares in Office Depot tumbled ahead of a decision from US antitrust regulators, who were expected to block the company’s $6.3bn takeover bid for Office Depot.

The New York Post cited a source close to the situation as saying that the Federal Trade Commission was scheduled to hold a meeting on Monday to vote on an enforcement action, which was believed to be the Staples deal.

Last week, Staples revised a package of actions it promised to take in order to gain regulatory approval of the deal that would combine the No. 1 and No. 2 office supply chains and was hoping the sweetened offer would sway the FTC to extend its review.

However, the Post said that doesn’t appear to be in the offing. In scheduling the vote, the FTC seems serious about sticking to its 8 December deadline to decide on the merger application, which is almost a year old.

The FTC has been leaning towards blocking the deal before Staples proposed its remedies last week, with commissioners worried that the merger would lead to increased prices for corporate customers.

Despite the FTC's agreement to issue a decision by 8 December, some market participants had been expecting the regulators to extend the deadline to give the companies more time to address their concerns that the merger would create a monopoly.

At 1546 GMT, Office Depot shares were 12.6% weaker at $5.80, while Staples was down 4.9% to $11.76.