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The U.S. government's antitrust watchdog, the Federal Trade Commission, is likely to approve the deal, experts said, agreeing with the companies that the rise of online retailers and mega stores had changed the competitive landscape since 1997 when the agency stopped the companies from merging.
The FTC noted the proliferation of competitors in the market for basic office supplies when it signed off on Office Depot's purchase of No. 3 OfficeMax in 2013.
"The same factors that the FTC cited in the Office Depot/OfficeMax deal are present here," said Seth Bloom, a veteran of the Justice Department's antitrust division now in private practice. "I think there's a fair chance for this deal to be approved."
The FTC's review will likely focus on whether prices have risen since Office Depot bought OfficeMax, said Michael Keeley, a partner at Washington, D.C. law firm Axinn, Veltrop & Harkrider.
"Unless the FTC finds that prices have gone up as a result of that acquisition, the Staples transaction should have a good chance at clearance as well," Keeley said.
Staples' shares fell more than 10 percent, suggesting investors were concerned about the deal to combine the biggest remaining U.S. retailers of basic office supplies such as paper and ink toner. Office Depot's shares rose about 1.5 percent.
Brian Yarbrough, an analyst at brokerage Edward Jones, said Staples was paying "a more than fair price" for Office Depot and was taking on a large debt to buy a competitor in a weak market.
Staples said it had secured a $3 billion credit facility and a $2.75 billion six-year term loan financing to fund the deal. It will also suspend its share buyback program.
Staples said it could call off the deal if authorities ordered divestitures that delivered more than $1.25 billion of Office Depot's 2014 U.S. revenue.
The FTC did not require Office Depot to ditch stores when it bought OfficeMax.
Activist investor Starboard Value LP called for the companies to merge last month to save costs.
Starboard last reported a 5.1 percent stake in Staples and a nearly 10 percent holding in Office Depot.
Staples will pay $7.25 per share in cash and 0.2188 of its shares for each Office Depot share, a premium of 44 percent to Office Depot's close on Monday before the Wall Street Journal reported that the companies were in talks.
At $16.89, the low of Staples' share price on Wednesday morning, the deal values each Office Depot share at $10.94. Office Depot's stock was trading at $9.38.
Barclays is financial adviser to Staples. Legal advisers are Wilmer Cutler Pickering Hale and Dorr LLP and Weil, Gotshal & Manges. Peter J. Solomon Co is financial adviser to Office Depot, whose legal adviser is Simpson Thacher & Bartlett.
(Additional reporting by Diane Bartz; Editing by Savio D'Souza and Ted Kerr)