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Staples gets swap OK
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August 27, 2001: 5:21 p.m. ET
Retailer's shareholders approve controversial stock conversion
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NEW YORK (CNNfn) - Shareholders of Staples Inc. and Staples.com Monday approved a controversial plan to convert shares of the online division into Staples common stock.
The No.2 office supplies retailer originally wanted to create a separate tracking stock for its Internet unit in November 1999, hoping to make a big public offering and big profits. However, not long after filing a prospectus for an initial public offering last February, the dot.com shakeout struck, and taking the unit public was no longer an option.
Earlier this year, Staples decided to reclassify Staples.com tracking stock back into Staples common stock. But some shareholders argued that the stock conversion would unfairly benefit the company's top executives and directors, and asked the company to provide more information on the deal, delaying Staples' annual meeting.
The reclassification, which passed on Monday with about 85 percent of the vote at the company's annual meeting, will allow the Framingham, Mass.-based company to integrate Staples.com with its catalog business and its retail stores.
"It allows us to optimize the penetration of our customers," Staples chairman Thomas Stemberg said after the vote.
Shares of Staples.com were initially priced at about $900 million, or $7 a share, more than double the $3.25 a share it was valued at in the fall of 1999, when Staples began privately selling shares in the unit.
Under the plan approved by shareholders, each share of Staples.com tracking stock will convert into 0.4396 share of Staples common stock, the company said.
Staples (SPLS: Research, Estimates) shares finished Monday's session at $15.38, with a loss of 2 cents. 
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Staples.com
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