Staples settles shareholder lawsuit

Staples has settled a lawsuit brought against it by a group of its shareholders over the office supply giant's plan to buy back control of Staples.com.

Staples has settled a lawsuit brought against it by a group of its shareholders over the office supply giant's plan to buy back control of Staples.com.

The Staples shareholders filed suit against the company in March, charging that its offer to pay US$7 per share of Staples.com was too high a price. Though Staples.com never issued stock to the public, it did issue a tracking stock. The stock was mainly offered to the company's directors, executives, employees and to some venture capitalists.

Under the settlement terms, which must be approved by the Delaware Court of Chancery, Staples agreed Monday to disclose more detailed information on how it arrived at the US$7 per-share price and also agreed to pay the US$2.7 million in attorney fees for the shareholders.

Staples shareholders will vote on whether to approve the stock buyback in August.

Staples is among the legion of traditional retailers that spun off Internet units in hopes of cashing in on the Internet IPO craze. But by the time Staples.com got off the ground, the downturn in e-commerce had already set in and the demand for technology IPOs dried up.

When Staples announced its plans to buy back shares of Staples.com for US$7 each, the shareholders cried foul. They charged that company executives were paying too much and were arranging a sweetheart deal for themselves.

After the suit was filed, Staples board members voted to "rescind their Staples.com shares," said Tom Nutile, a spokesman for Staples.com.

"We're pleased that we have put this matter behind us," Nutile said. "This settlement enables Staples to concentrate on running the business and on the shareholder meeting in August."

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