Essendant Confirms Receipt Of Two Proposals

Essendant Inc. (ESND) Wednesday confirmed that it received an unsolicited proposal from Staples, Inc. to acquire all shares of Essendant stock for $11.50 per share in cash. Essendant's confirmation follows today's Schedule 13D filing with the U.S. Securities and Exchange Commission by Staples, Inc., Sycamore Partners and certain affiliates disclosing a 9.9% ownership stake in Essendant.  Staples is a portfolio company of Sycamore Partners.

On April 17, 2018, Staples communicated its initial proposal to Essendant, which Essendant declined after thorough review by its Board in consultation with its financial and legal advisors.  Staples sent a revised proposal on April 29, 2018 stating that it believed it will be able to identify incremental value opportunities to enable it to increase its offer significantly in excess of $11.50 per share after receiving confidential information and engaging in discussions with Essendant.  On May 4, 2018, in consultation with its financial and legal advisors, Essendant's Board determined that Staples' revised proposal is reasonably likely to lead to a "Superior Proposal" as defined in the merger agreement with Genuine Parts Company ("GPC").  There can be no assurance that the Staples proposal will result in a transaction.

On May 7, 2018, GPC made an enhanced proposal to the previously announced merger agreement with Essendant under which Essendant shareholders would be provided a nontransferable right to a contingent cash payment following completion of the merger and based on the subsequent trading price of Essendant shares. The contingent payment would have a maximum value of $4.00 per share and a minimum value of zero.  Specifically, the contingent payment would be equal to $12.00 per share minus the greater of (a) the weighted average price of Essendant shares during a 20-day measurement period ending at the later of (i) December 31, 2019 or (ii) the 12-month anniversary of closing, or (b) $8.00, subject to other terms and conditions.  There can be no assurance that the GPC merger agreement will be amended to incorporate this proposal.

As previously announced on April 12, 2018, Essendant entered into a definitive merger agreement to combine Essendant and GPC's S.P. Richards business in a Reverse Morris Trust transaction. Upon closing of the transaction, GPC shareholders will own approximately 51% and Essendant shareholders will own approximately 49% of the combined company.  The merger agreement with GPC remains in effect, and the Essendant Board has not changed its recommendation that Essendant's shareholders vote in favor of that transaction.

Citigroup Global Markets Inc. is acting as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Essendant.