NEW YORK (TheStreet) -- Shares of Staples Inc. (SPLS) are higher by 1.06% to $16.27 in mid-morning trading on Friday, as speculation regarding the benefits to the company if it were to acquire Office Depot Inc. (ODP) continue.
Staples' earnings could increase by at least 60% if the office products company were to merge with its competitor, according to data compiled by Bloomberg.
Analysts have forecast that over $1 billion of costs could be cut if the two retailers, which have been struggling, were to combine in an all stock merger, Bloomberg added.
Redundant expenses or synergies come from Staples and Office Depot having stores with overlapping areas. The two companies have over 3,000 store locations in North America between the two of them, which could be reduced by 30% thanks to a merger and result in $302,000 of synergies per closes store, said a Credit Suisse analyst, Bloomberg noted.
Shares of Office Depot are up by 1.06% to $7.61 this morning.
Separately, TheStreet Ratings team rates STAPLES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate STAPLES INC (SPLS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."