Regulator Rejects Staples-Office Depot Merger, Again

Staples’ revised $5.5 billion bid to buy rival Office Depot ODP was rejected by the U.S. Federal Trade Commission, the company said on Monday, thwarting again its attempt to create a larger entity better able to contend with the major changes reshaping the office supplies market.

Seeking to mollify the FTC’s opposition to the deal, Staples had offered to sell off or give up $1.25 billion worth of commercial contracts, a bright spot in its otherwise pressured business. To no avail.

Staples said the FTC, which earlier this month sued to block the deal, had not made a counteroffer but the retailer said it was nonetheless “still willing to continue negotiations” with the agency to come up with an acceptable solution. But it also said it was pursuing the deal “through litigation. ” An administrative trial on the deal is set to begin on May 10, 2016.

Two weeks ago, the FTC said it would block the deal, arguing that it would seriously curb competition for consumable office supplies sold to large business customers. The bid was originally announced in February. Office Depot bought OfficeMax two years ago, reducing the Big Three in office supplies to the Big Two, at a time sales were in serious decline as rivals like Amazon.com and Walmart among many others were stealing market share. Staples also fights with the likes of Costco Wholesale and FedEx in the commercial market.

It was Staples’ hope that the emergence of such strong rivals would address anti-trust concerns. The proposed Staples-Office Depot merger would involve $4 billion in cash and a stock component. At the time the deal was announced, the bid was worth $6.3 billion, but it has fallen significantly in value since then as Staples shares have fallen.

Staples last year announced it was closing hundreds of its North American stores to stanch the bleeding in that business. Despite that, comparable sales, which strip out the impact of closed or newly opened stores, have continued to fall. At the same time, its commercial contracts business is growing, illustrating how much it wants to get a deal done if it is willing to lose $1.25 billion in contracts.

This second FTC rejection comes on the heels of a few deals being called off this month because of U.S. antitrust activity. A merger between canned tuna companies Bumble Bee and Chicken of the Sea was called off and General Electric canceled a contested $3.3 billion sale of its home appliances unit to Sweden’s Electrolux.

This article originally appeared on Fortune.com.