Corporate Express drops sharply following takeover news
News that the global office supply manufacturer is taking over French competitor Lyreco for EUR 1.73 billion has caused share value to drop.21 May 2008
AMSTERDAM - The share value of global office supply manufacturer Corporate Express dropped dramatically at the Amsterdam exchange on Wednesday following news it would take over its French competitor Lyreco for EUR 1.73 billion.
Shares dropped by more than 8 per cent initially, and by mid- morning stood at EUR 7.70, a drop of 5.05 per cent.
Investment analyst Rob Koenders, affiliated with Harmony Vermogensbeheer, was one of the financial analysts to respond negatively to the news about the upcoming merger.
"I fear that Corporate Express's shareholders will finance this takeover," he said.
But Corporate Express said the financing of the merger has already been settled. The takeover will be financed partly in cash and partly in shares.
Lyreco's shareholders, who have already agreed to the takeover, will receive a 30-per-cent share in the new company.
The news about the takeover comes soon after Corporate Express rejected a takeover bid by American Staples. Staples had offered to pay EUR 8 per share or EUR 2.8 billion in total, including debts.
In a statement to the press on Wednesday, Corporate Expresses CEO Peter Ventress said the takeover of Lyreco has nothing to do with Staples' previous takeover bid.
"We would also have done this had there not been a takeover bid by Staples," Ventress said.
"Our two companies simply complement each other well."
Corporate Express will ask its shareholders for permission for the takeover in the second half of June. The takeover itself is due to be completed by the end of this year.
The new company, operating under the name Corporate Express, will be headquartered in Amsterdam.
With a combined turnover of some EUR 7.9 billion, the new Corporate Express is due to become the biggest player on the office supply market in North-America, Europe and Asia.
According to Corporate Express and Lyreco, the merger will save each company some EUR 100 million in expenses and contribute to the profit per share.
The new company, which will operate under the name Corporate Express, gets 43 per cent of its turnover from Europe, 39 from North- America and 11 per cent from Asia.
The company has 28,000 employees and is active in 32 countries.
Eric Bigeard, board president of Lyreco, will be the appointed CEO of the new company.
Current Corporate Express CEO Peter Ventress is due to become operational CEO. The merger must be completed by the end of the year.
[dpa / Expatica]