''This is a very sober valuation.''
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AP Business
Staples Sued by Shareholders
FRAMINGHAM, Mass. (AP) -- Office supply chain Staples Inc. is being sued by shareholders who are trying to block a share buyback program they call too generous.
The suit, filed in state Chancery Court in Delaware Friday, where Staples is incorporated, is in response to plans announced by the superstore last week to buy back shares of Staples.com, its Internet arm, at about $7 a share, said Chet Waldman, a partner of Wolf Popper LLC.
The New York-based law firm is representing one of seven reported plaintiffs, who are concerned the stock is being valued too highly, despite the recent price drop in other Internet-related shares.
Shares of Staples.com were issued as a tracking stock after the company considered taking the Internet venture public in November 1999, said Staples spokesman Tom Nutile. The stock, valued at $3.25, was never traded publicly.
There are more than 17.5 million shares currently outstanding, including 7.9 million as stock options, according to company officials. Of that, 3.9 million shares are held by 27 current directors and executive officers, for an approximate value of $27 million.
Company officials defended the buyback plan, saying the Internet division had grown eight-fold since 1999.
''This is not some high-flying peak of the Internet craze valuation,'' Nutile said. ''This is a very sober valuation.''
The stock was valued by the company, and the valuation was then approved by two outside consultants, he said.
Company officials point to Staples.com's growth, from $60 million in sales in 1999 to $512 million at the end of fiscal year 2000. The company expects Staples.com to break into profitability in the fourth quarter of 2001, Nutile said.
Framingham-based Staples, with 1,300 stores and 50,000 employees, is the second-largest office supply chain behind Office Depot.
Staples stock was down 31 cents at $14.63 at close of trading Tuesday.
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AP-NY-03-27-01 1752EST<
03/27/2001 |
