Office supplies battle hotting up

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The Dutch office supplies company Corporate Express plans to buy its French rival Lyreco to fend off a hostile takeover by Staples.

Corporate Express will pay about 1.7bn euros ($2.7bn; £1.4bn) in cash and shares for Lyreco, which is more than its own market value of 1.4bn euros.

The plan was announced in a joint statement by the two companies.

Last week, Corporate Express rejected a $2.47bn takeover from Staples, saying it undervalued the company.

Corporate Express and Lyreco only deal with businesses while Staples also serves individuals through its stores.

If the merger is approved by shareholders and regulators, the new company will be bigger than Staples in business-to-business sales in the US, Europe and Asia.

"Although there is a strategic rational to merge with Lyreco, it also illustrates Corporate Express' attitude toward the Staples offer and that it will do anything to avoid the takeover," said Fernand de Boer, an analyst at Petercam.