At closing of the Merger, Staples expects to separate its United States retail business (“U.S. Retail”) and its Canadian retail business, including the staples.ca business (“Canadian Retail”, and together with U.S. Retail referred to as “Retail”) into two separate Sycamore-affiliated entities (the “Carveout Transactions”) and expects to receive $1,350 million from such separation. Each will be independently managed and capitalized following the closing of the Merger and the Carveout Transactions, and will be operated as independent businesses. The remaining business within Staples will consist solely of the NAD business.
The purchase agreements between Staples and the acquirers of each Retail business have been reached and purchase prices are known, though the tax impacts of the form of the separation are still being evaluated. As the tax impact is not yet known, an estimate of the resulting tax gain or loss, if any, has not yet been reflected in these unaudited pro forma condensed consolidated financial statements.