SPLS Staples, Inc.

The Federal Trade Commission is stepping up its probe of Staples Inc.'s takeover of rival Office Depot Inc., seeking sworn legal declarations that could be used if antitrust enforcers decide to challenge the deal, according to people contacted by the agency.

The requests for sworn statements from other market participants about the deal's impact on the office supply business may be a sign the FTC is gearing up for a possible lawsuit against the deal which was valued at $6.3 billion when it was announced. In its review, some of the FTC's most probing questions have focused on the chains' business with large corporate and government customers, according to several people contacted by the agency.

The antitrust review is continuing and the commission hasn't yet to decide whether to approve or challenge the merger, according to several other people familiar with the matter. The commission has until mid-October to decide whether to challenge it, though that deadline could be pushed out if the companies give the FTC more time.

In previous investigations, FTC staffers have solicited legal declarations in mergers that ultimately went ahead. Antitrust enforcers in recent years have placed a priority on being prepared to bring cases in the event that legal action is commenced.

The two companies announced their intention to merge in February and have been going through the antitrust review process since. Last month, both companies said they had satisfied the commission's second request for information, a standard step in the data-gathering process that regulators use to gauge whether a merger will lessen competition.

Staples spokesman Kirk Saville declined to comment. Office Depot spokeswoman Karen Denning referred to a corporate news release last month that said executives expect to close the deal by year's end. An FTC spokesperson also declined to comment.

Investors have lingering questions about whether the combination will pass muster. Office Depot shares are trading at a roughly 25% discount to the proposed deal price. Staples is offering to pay $7.25 in cash plus 0.2188 of its shares for each Office Depot share. That's worth about $10.35 versus Office Depot's current share price of $7.63.

Investigators this summer asked Staples competitor W.B. Mason Co. for data on its corporate supply contracts, which are largely focused on the Northeast. U.S. Chief Executive Leo Meehan said FTC officials' most detailed follow-up questions in past talks dealt with those bulk buyers.

Mr. Meehan said the FTC investigators appeared to be especially interested in its relationships with the biggest companies, but said he hasn't heard as much from the commission in recent weeks.

It is unclear how many market participants have been asked for declarations. Some companies contacted by the FTC during the investigation haven't had much follow-up with agency staffers, people familiar with the matter said.

The continued antitrust scrutiny could add to the skepticism surrounding the two office suppliers' tie-up, which the FTC successfully derailed in 1997. The agency argued then that the retailers would control too much of the consumer market for office supplies.

Both companies' executives have said those factors no longer apply to today's shoppers, who can pick among many websites and big-box retailers for workplace necessities like pens and folders. The FTC endorsed that view in 2013 when it allowed Office Depot to absorb OfficeMax.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Brent Kendall at brent.kendall@wsj.com

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(END) Dow Jones Newswires

September 08, 2015 16:55 ET (20:55 GMT)

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