Just a few months after roundly mocking Olive Garden and then seizing seats on its board of directors, the activist investors at Starboard Value are reportedly hoping to arrange the marriage of office supply retailers Staples and Office Depot.

CNBC, citing people familiar with the matter, reported this morning that Starboard Value is poised to merge the rival retailers.

According to filings cited by CNBC, Starboard has recently taken a 5.1% stake in Staples and increased its existing holding in Office Depot by about 10%.

A pending deal between the two companies could be valued at more than $6 billion, analysts tell Reuters.

While a combined Staples, Office Depot retailer could help the companies fend off competition from online retailers and big-box stores, any pending marriage would face serious antitrust scrutiny.

That added probe by regulators would likely center on the fact that Staples and Office Depot are the biggest remaining retailers of core office supplies.

Office Depot previously purchased the other top office supply store, Office Max, just a year ago for $967 million. That deal was given the go-ahead after regulators deemed there was plenty of competition in the office supply industry.

Reuters reports that this wouldn’t be the first go-around for a union between the two retailers, 17 years ago regulators objected to Staple’s attempt to buy Office Depot.

The driving force behind the potential merger, Starboard Value, has become known for its aggressive business tactics in recent years.

The shareholder put the heat on Office Depot during the ramp-up to its merger with Office Max, but more recently it’s been dabbling in a bit of a food war.

In September, the company issued a 300-page writeup of issues facing Olive Garden, criticizing the restaurant’s parent company Darden.

The group not-so-quietly threatened that it would take takeover control of the Darden board of directors if things didn’t change.

And just a month later, Starboard was able to oust the entire Darden board during a meeting.

While any kind of merger between Staple and Office Depot remains in infancy, it wouldn’t be hard to see Starboard putting up a tough fight in favor of the marriage.

Starboard wants Staples, Office Depot to merge: Sources [CNBC]
UPDATE 3-Starboard wants Staples, Office Depot to merge – CNBC [Reuters]

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