Staples and office depot: An event-probability case study

Investors in financial markets bet their dollars on whether a merger will r aise or lower prices. Below, we apply an event-probability methodology to t he proposed merger between Staples and Office Depot, which was challenged b y the FTC and eventually withdrawn. In addition to a time-series regression , we also look at the effect of the merger in specific event windows. We fi nd highly significant returns to the only rival firm in the relevant market . We estimate the price effect of the merger and find it highly consistent with independent estimates.