Future Group along with two top company executives has bought most of the 50% shareholding of the world’s largest office supplies firm Staples in their joint venture, in a role reversal for the two partners from earlier plans. The joint venture has been re-arranged with Future Retail now owning more than 60% stake in Staples Future Office Products while most of the remaining share are held by the two co-CEOs of the firm, Shailesh Karwa and Sharad Dalmia, a person familiar with the deal said. “Staples continues to hold the strategic interest through convertible preference shares in the company along with the call option to buy a majority stake in the company in the next five years,” the person said.
The development marks a role reversal in the joint venture partners’ plans. Last year, there were reports that Staples Inc would buy out Future Group’s 39% stake in the joint venture for about 200 crore as Kishore Biyani’s firm was looking to exit non-core businesses and joint ventures to pare its debt. As part the new deal, Staples Future has received $25 million (approx 136 crore) of new capital, making the company debt free. “Staples does not want to exit the business as several Indian units of its global clients are being served by them,” the person quoted earlier said. While Staples Future declined to comment on the deal, it said both Staples and Future Group remain committed to the business and the firm is targeting revenues of over 1,000 crore in the next five years.
Staples Future supplies office stationeries to large businesses such as Infosys, Wipro, Accenture and Hewlett Packard as a wholesale cash-and-carry operator besides providing office and school supplies as well as computer accessories to over half a dozen Staples branded retail stores run by the Future Group on a franchise basis. It currently has net sales of 200 crore. Co-CEO Karwa said, “We are now building up back-end efficiencies and are expanding our product portfolio by entering housekeeping and pantry supplies too.” Staples Future is now eying small and mid-sized companies that account for a bulk of the $18-billion (approx 98,000-crore) stationery market in India where just 2% is organised. Karwa said Staples Future is already the largest wholesale ecommerce venture in the country. It runs a B2B e-procurement platform currently used by over 1,000 large enterprise customers in India in 300 towns and cities through nine company-owned distribution centres.