In a deal valued at $6.3 billion, office supply company Staples has announced it will buy competitor Office Depot.
The price comes to about $11 a share. The deal will create a chain with more than $35 billion in revenue.
Office Depot shareholders will get $7.25 in cash and 0.2188 of a share in Staples stock at closing, the office-supply retailers said in a statement today.
The second and third-largest office supplies stores, Office Depot and Office Max, merged in 2013. That transaction was approved by the FTC.
According to The Associated Press, Staples has a market capitalization of approximately $11 billion, while Office Depot, which tied up with OfficeMax in November 2013, has a market capitalization of about $4 billion.
The two companies began talking about a buyout in September, they said Wednesday.
Starboard, an investor with stakes in both retailers, sent a letter to Staples Chief Executive Officer Ronald Sargent last month demanding that his company engage advisers to work on a deal, according to Bloomberg. The combination could deliver more than $2 billion in cost savings and help the retailers compete with larger chains and online offerings, according to Starboard.
The deal is expected to close by the end of the year, and will likely draw scrutiny from anti-trust regulators. In 1997, when Staples last attempted to buy Office Depot, the FTC rejected their attempt, citing the risk of impairing their competition.
On Tuesday, The Wall Street Journal reported the two companies were in advanced talks to merge.
Information from the Associated Press was used in this report.