Reuters Business Report
Staples to Buy Medical Office Supplier
By Jeffrey Goldfarb
NEW YORK (Reuters) - Staples Inc. (NasdaqNM:SPLS - News), the No. 2 U.S. office supply chain, said on Tuesday it would buy Medical Arts Press -- a seller of specialized office products to doctors -- for about $245 million to widen its customer base.
The deal gives Staples a foothold in the high-margin market, which it has had a tough time cracking because the 750,000 doctors' offices across the country tend to be loyal customers, said John Malone, Staples' executive vice president and chief administrative officer.
Staples, based in Framingham, Massachusetts, said it expects the deal to close over the summer and to have little or no effect on its 2002 earnings. It expects the deal to add 1 cent or 2 cents a share to its 2003 earnings.
Staples, which trails rival Office Depot Inc. (NYSE:ODP - News), also said it will pay off about $140 million of debt held by Medical Arts Press.
Privately held Medical Arts Press, the largest seller of specialized medical software and forms to doctors, dentists, chiropractors and veterinarians, had revenue of $168 million and about $48 million of earnings before interest, taxes, depreciation and amortization in 2001, Staples said.
Malone said he sees cost savings from combining the two companies' marketing, purchasing, catalog printing, and call center activities. Staples sells thousands of office products at more than 1,400 Staples and Staples Express stores.
Medical Arts Press, founded in 1950 as a storefront print shop, will continue to operate under its own name in its Minneapolis headquarters. It has about 300,000 customers.
Medical Arts Press also owns SmileMakers, the largest direct marketer of children's giveaway items for the medical and educational markets.
Staples shares increased 35 cents to $18.80 in Tuesday morning trading on the Nasdaq, and are up about 25 percent over the past year.
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