Sycamore Partners intends to split Staples Inc. into three to help fund its $6.9 billion purchase of the office-supply seller, in another sign of the challenges facing the retail industry, the Wall Street Journal reported today. The plan calls for Staples to be divided into three separately financed entities: U.S. retail, Canadian retail and corporate-supply businesses. The three groups will remain under the same corporate umbrella. The move is designed to make the leveraged buyout of Staples, announced Wednesday, an easier sell to bond and loan investors whose appetite for retail names has soured as the industry’s prospects have waned. Their appetite will be crucial to financing the deal, the largest LBO announced this year. UBS AG , Bank of America Corp. and other Wall Street banks plan to arrange bonds and loans backing only the Staples unit that distributes paper, pens and other supplies to large business and government customers.
