Dive Brief:

• Staples, Inc. and workplace product and services company Essendant Inc. last week announced they have entered into a definitive agreement where an affiliate of Staples will acquire Essendant for $12.80 per share, a 51% premium to Essendant's share price on April 11, or a transaction value of $996 million including net debt. 

• The move follows Essendant's previous rejection of a lower Staples offer and the termination of an acquisition proposal by Genuine Parts Company. Staples will pay a $12 million break-up fee to Genuine Part as part of its agreement with Essendant, according to a press release from the companies.

• Essendant is a national distributor of workplace items, with net sales last year of $5 billion. The company provides janitorial and breakroom supplies, technology and traditional office products, industrial supplies, cut-sheet paper products, automotive products and office furniture to various businesses, including resellers and e-commerce companies. Its network of distribution centers enables it to ship most products overnight to more than 90% of the U.S., according to the release.

Dive Insight:

This move follows Staples' June purchase of business solutions HiTouch Business Services for an undisclosed amount, as both the office supplies retailer and rival Office Depot elevate their business-to-business services amid contraction in the retail market.

Last year Staples announced a strategy that hinges on further penetrating the B2B market rather than direct-to-consumer sales — a move that comes as Amazon is also moving aggressively into the same area. The retailer is attempting to shift sales from stores to the online channel and hopes to reduce brick-and-mortar sales from 40% to 20% by 2020.

Rival Office Depot is also experiencing a time of transition and acquisition. The retailer bought IT provider CompuCom Systems last year for $1 billion. This year, Office Depot is in the midst of training its sales force, rolling out new services and executing a store pilot in Austin, Texas, that brings business services to the forefront. 

Its Essendant purchase will " ultimately deliver significant value to independent resellers and end customers across the U.S.," Staples said in a statement.

Staples is privately held, acquired last year by private equity firm Sycamore Partners for approximately $6.9 billion. It was one of last year's biggest retail acquisitions and has given Staples some much-needed breathing room to complete a turnaround without scrutiny from Wall Street investors. The firm almost immediately began making major adjustments, including the split of its business-to-business and retail operations. Earlier this year the company also tapped former Coca-Cola executive J. Alexander Douglas to replace Shira Goodman as CEO.