WASHINGTON, May 11 (UPI) -- Office Depot and Staples, the largest U.S. office suppliers, on Tuesday canceled plans to merge after a federal judge sided with the Federal Trade Commission over antitrust concerns.
U.S. District Judge Emmet Sullivan blocked the $6.3 billion deal because the FTC met the "burden of showing that there is a reasonable probability that the proposed merger will substantially impair competition in the sale and distribution of consumable office supplies to large business-to-business customers."
Staples released a statement in which it said both companies "plan to terminate their merger agreement." The companies hoped to create more than $1 billion in annual savings with the deal.
"We are extremely disappointed that the FTC's request for preliminary injunction was granted despite the fact that it failed to define the relevant market correctly, and fell woefully short of proving its case," Staples CEO Ron Sargent wrote.
The companies previously attempted to merge in 1997, but that effort was also blocked by the FTC. Staples shares have dropped at least 15 percent and Office Depot shares have dropped at least 30 percent in pre-market trading. The companies have faced increased competition from non-traditional office suppliers such as Amazon and Walmart.