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Non-Tech : Staples (SPLS) -- Ignore unavailable to you. Want to Upgrade?

To: Adelantado who wrote (180)	3/25/2001 9:52:10 AM
From: Glenn Petersen	Read Replies (1) \| Respond to of 184

SPLS angers shareholders with plan to repurchase shares of Staples.com: Staples.com share buyback sparks investor anger By Ellis Mnyandu NEW YORK, March 23 (Reuters) - Investors in office products retailer Staples Inc.<SPLS.O> on Friday slammed a plan by the company to repurchase shares of its online arm, Staples.com, saying the price was too high and benefited management rather than shareholders. The offer values each Staples.com share at the equivalent of about about $7, more than double the $3.25 per share at which the shares were originally sold. The price, which values all of Staples.com at about $900 million, takes no account of the fading appeal of Internet retailers, the investors said. "This is an abuse to the shareholders' rights and it's something blatantly against their interests," David Dreman, chairman of Dreman Value Management told Reuters. "This is ludicrous." Dreman's firm owns about 3.5 million Staple Inc. shares in its managed asset portfolio of $5 billion. "I think the price being paid in this buyback is outrageous because the valuation of the business bears no resemblance to its true worth," said David Stemerman, a portfolio manager at Lone Pine Capital, which owns Staples shares. But Framingham, Mass.-based Staples, the No. 2 U.S. office products retailer behind Office Depot Inc.<ODP.N>, dismissed sharehholder concerns, saying the buyback was aimed at benefiting all Staples investors and its pricing had been vetted by two independent firms. "We have talked to a number of our investors since this plan was announced and the reaction we have had has been very positive," Tom Nutile, a Staples Inc. spokesman told Reuters. "We think all shareholders will benefit, they will be getting the same price and it is a fair and equitable price, based on the fact that Staples.com is an Internet success story," Nutile added. Under the plan, a group of executives and directors will receive the equivalent of about $37 million in Staples Inc. stock, while other investors -- venture capitalists and a group of employees -- will get $85 million in stock. Staples Inc. shareholders are due to vote in May on the buyback plan, which was announced on Wednesday. It was proposed by the company after it pulled the plug this week on a proposed initial public offering of Staples.com's tracking stock, a move portfolio managers said highlighted Staples' own worries about the dot-com bust. Critics said the move to swap each Staples.com share into 0.4396 shares of the parent company was structured so that Staples executives and some venture capitalists could turn a profit on their investment now that a plan for a public offering of the Internet arm has been scrapped. "I just think management are bailing themselves out of something that is probably worth a very small fraction of what they are proposing," Dreman said, adding Staples.com was not insulated from the dot.com fallout and from the slowing U.S. economy. Staples also said as part of that announcement that it would merge its small-business and consumer catalog operation with Staples.com. The dot-com fallout has seen money-losing Web ventures shut down at a rate of about a dozen a week since the start of 2001, according to research and advisory firm Webmergers.com. But Staples Inc's Nutile said Staples.com was a sound Internet business and was set to grow. In its fourth quarter ended Feb. 3, Staples Inc. posted a net loss of $111.7 million, mainly due to charges for writedowns in the value of Staples Communications and Internet operations. It said then, however, that its Internet business was on track to becoming profitable in the fourth quarter of the current fiscal year. Staples' shares dropped 50 cents, or 3.2 percent, to $15.13 on Friday in Nasdaq trading. 19:35 03-23-01