Staples Annual Report 2007 and Corporate Express

On April 30th, Staples released its Annual Report 2007 on their website, which you can download through this link. I assumed there must be some mention of the intended acquisition of CE, and indeed I was not disappointed. For readers who are not interested in reading the whole report I have placed all content of the report relating to CE below:

PROPOSAL 4— APPROVAL OF AMENDMENT TO 2004 STOCK INCENTIVE PLAN

Based on our history of granting equity awards, the anticipated growth in the number of our stock eligible associates, and our intentions for using equity as part of our total compensation program, we anticipate that the amendment to the Equity Plan, if approved by our stockholders, would support our equity program needs through our 2009 fiscal year. This estimate does not reflect the potential impact to our equity program of our proposal to acquire all of the outstanding ordinary shares of Corporate Express, NV, a Dutch office products distributor with operations in North America, Europe, Australia and New Zealand and approximately 18,000 employees. If the amendment is not approved by our stockholders, we will experience a shortfall of shares available for issuance under the Equity Plan that will adversely affect our ability to attract, retain and reward associates who contribute to our long term success.

Corporate Express Proposal

On February 19, 2008, we announced that we had made a proposal to Corporate Express NV (‘‘Corporate Express’’), a Dutch office products distributor with operations in North America, Europe, Australia and New Zealand, to acquire all of the outstanding shares of its ordinary stock for cash consideration of 7.25 Euros per ordinary share, representing a total enterprise value of approximately 2.5 billion Euros (approximately $3.7 billion). Corporate Express, in a public statement issued the same day, rejected our proposal.

Item 1A. Risk Factors

We may not consummate our proposed acquisition of Corporate Express or realize any benefits if we do complete the acquisition.

On February 19, 2008, we announced that we had made a proposal to Corporate Express NV, a Dutch office products distributor with operations in North America, Europe, Australia and New Zealand to acquire all of the outstanding shares of its ordinary stock for cash consideration of 7.25 Euros per ordinary share, representing a total enterprise value of approximately 2.5 billion Euros (approximately $3.7 billion). Corporate Express, in a public statement issued the same day, rejected our proposal. We cannot provide any assurances that the proposed acquisition will be consummated. If we are unable to complete the proposed acquisition, we may have incurred substantial expenses and diverted significant management time and resources from our ongoing business. Even if we consummate the proposed acquisition of Corporate Express, we may not realize any of the anticipated benefits of the acquisition, and we may encounter difficulties in the integration of the operations of Corporate Express.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Our guidance for future periods excludes any potential impact relating to our previously announced proposal to acquire all the outstanding ordinary shares of Corporate Express.

We consider many types of acquisitions for their strategic and other benefits on a case by case basis, such as our recently announced proposal to acquire all the outstanding shares of Corporate Express NV. However, we have most recently targeted and expect to continue to target acquisitions that are small, aligned with our existing businesses, focused on both strengthening our presence in existing markets and expanding our presence into new geographies that could become long-term meaningful drivers of our business, and financed from our operating cash flows.

Proposed Acquisition of Corporate Express

On February 19, 2008, we announced that we had made a proposal to Corporate Express NV, a Dutch office products distributor with operations in North America, Europe, Australia and New Zealand to acquire all of the outstanding shares of its ordinary stock for cash consideration of 7.25 Euros per ordinary share, representing a total enterprise value of approximately 2.5 billion Euros (approximately $3.7 billion). To finance a portion of this proposed acquisition, we entered into a bridge loan commitment letter with Lehman Brothers on customary terms and conditions. We may only borrow amounts pursuant to this committed financing in connection with the proposed acquisition of Corporate Express. We believe that this committed financing together with our cash and available credit under our revolving credit facility would be sufficient to finance the acquisition. Corporate Express, in a public statement issued the same day, rejected our proposal.