Staples (SPLS) Stock Tumbling on Concerns Following Sysco, US Foods Merger Ruling

NEW YORK (TheStreet) -- Staples (SPLS) stock is tumbling 4.18% to $15.93 after Sysco's (SYY) $3.5 billion takeover of US Foods was blocked by U.S. District Judge Amit Mehta in Washington on Tuesday, raising concerns that Staples could also have its $6 billion acquisition of Office Depot (ODP) halted, Bloomberg reports.

The judge said today that the merger of the food distribution giants Sysco and US Foods was stopped because it would reduce competition and raise prices, Bloomberg noted.

This block is concerning office supply companies, as Staples announced in February that it will acquire Office Depot. This acquisition will allow Staples to provide more value to customers and more effectively compete in a rapidly evolving environment, Staples' CEO Ron Sargent said. 

Following the merger agreement, Office Depot's shareholders last week said that they approved the acquisition. 

However, as the deal awaits approval from federal antitrust regulators, the question is whether increased antitrust scrutiny will make it harder for Staples to execute its deal, Bloomberg added.

Separately, TheStreet Ratings team rates STAPLES INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate STAPLES INC (SPLS) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

If you liked this article you might like

'Cloud Wars' Intensify; Staples Shows Some Staying Power -- ICYMI Friday

Brick-and-Mortar Stores Like Staples Reign Supreme for Back-to-School Supplies

In Retailers' Gang War, This Is Why I Am Rooting for Walmart: Market Recon