Court Dismisses Lawsuit Against Essendant Relating to Staples Merger

Staples Rebrand Logo NewA Delaware court dismissed a case against Essendant, as of October the sister company of Staples, which claimed that it breached its fiduciary duty during the process of being acquired by Sycamore Partners. Shareholders said in the class action lawsuit that Essendant aborted a previous agreement to merge with another office supplies company, S.P. Richards.

The court, however, found that shareholders couldn’t adequately substantiate their claims that the Sycamore deal garnered a “less attractive” financial outcome than what would have come with the S.P. Richards deal.

“The gravamen of the complaint is that the Essendant board succumbed to pressure from Sycamore, and improperly turned [S.P. Richards parent company Genuine Parts Co.] away in favor of an inferior proposal from Sycamore,” the court document reads, according to Digital Commerce 360.

In his dismissal of the claims, Court of Chancery vice chancellor Joseph Slights said that the plaintiffs didn’t adequately show that Essendant was “dominated and controlled by Sycamore,” or that the Essendant board made their choice out of self-interest or bad faith.

“This was a typical, arm’s length, two-step public company merger negotiation,” Slights wrote.

This is good news for Staples and Essendant, who we reported back in October could grow the Staples promotional and office supply brand thanks to this merger. Not having a lawsuit on its back clears the air even more for it to grow in 2020.

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