Staples Increases Offer Price per Preference Share A to EUR 3.60

Today, after trading hours in Europe, Staple issued a news release, informing us that they have raised the offer price for the preference shares to EUR 3.60. Apparently the combination of the neutral recommendation by CE, and the concentration of a large number of preference shares in the hands of a few parties has led to this result. It does make sense that Staples has increased the offer, because the holders of preference shares would probably have been successful in achieving a higher value, when Staples wants to liquidate the CE holding company.

In the position statement, CE mentions the following about the preference shares:

"However, the Boards have noted that the Articles of Association of Corporate Express state that cancellation of Preference Shares A is only possible against an amount ("the Cancellation Value") equal to the sum of:

� the “yield basis” of €3.40355; and
� the accrued dividend for the year.

On the basis of the Cancellation Value, the Offer price of €3.15 per Preference Share A does not compare favourably to the Cancellation Value. "

So my guess is that the low offer on the preference shares, which was entirely based on the market price of the preference shares prior to the offer, with only a modest premium, could have resulted in a low tender of these preference shares. This may not have resulted in a failed acquisition, since the 51% minimum level can also be achieved without the preference shares.

But obviously Staples wants to own the whole company, and does not want to be stuck with minority shareholders, who have protection in a squeeze out procedure. They must have reasoned that it is better to deal with it now, instead of later, which can only be sensible.