Sycamore Partners intends to split Staples Inc. into three to help fund its $6.9 billion purchase of the office-supply seller, in another sign of the challenges facing the retail industry.
The plan calls for Staples to be divided into three separately financed entities, according to people familiar with the matter: U.S. retail; Canadian retail; and corporate-supply businesses. The three groups will still remain under the same corporate umbrella.
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The move is designed to make the leveraged buyout of Staples, announced Wednesday, an easier sell to bond and loan investors whose appetite for retail names has soured as the industry's prospects have waned. Their appetite will be crucial to financing the deal, the largest LBO announced this year.
UBS AG, Bank of America Corp. and other Wall Street banks plan to arrange bonds and loans backing only the Staples unit that distributes paper, pens and other supplies to large business and government customers, the people said. The delivery operation is the largest and seen as the crown jewel of Staples.
Sycamore plans to help fund the Canadian retail business with debt from asset manager KKR & Co., the people said. Wells Fargo & Co. will finance the U.S. retail segment with a loan backed by the chain's assets, they said.
Drew FitzGerald contributed to this article
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(END) Dow Jones Newswires
June 29, 2017 11:22 ET (15:22 GMT)