In a series of blogs by Azul Partners Chief Research Officer Pierre Mitchell, the role of procurement is examined within the context of a Staples/Office Depot merger.
In part one, Mitchell stated: “For a large enterprise’s buying requirements, especially those with large numbers of facilities like retail, banking and hospitality, Staples and Office Depot are really the only game in town. Having them merge is like having SAP and Oracle merge. If that happened, you would argue that although the technology market is big and competitive, buyers would be competitively hampered. This is the crux of the argument facing the Federal Trade Commission and federal courts in its decision.”
In addition, if the merger goes ahead, any benefits such as price reductions from increased buying leverage may well not happen. “CPOs are not going to necessarily just roll over if the combined entity comes back with post-merger synergies that include a price increase, and the proposed merger could very well work against those benefits,” wrote Mitchell.
Mitchell advocates reading a recent white paper from an antitrust watchdog group and although he warns that the report is clearly biased against the deal, there are some important learnings within it.
“CPOs should indeed be wary of the implications [of the merger] and be prepared for countermeasures,” he said.
Read the full article on Spend Matters Chief Procurement Officer here.
Read part two tomorrow.
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