This morning it was reported that activist investment firm Starboard Value was building up stakes in Office Depot Inc (NASDAQ:ODP) and Staples, Inc. (NASDAQ:SPLS), and now the firm’s goal has become clear. It sounds like Starboard may want the two office supply chains to merge.

Office Depot Inc, Staples, Inc. Up On Starboard Push

Starboard pushes for Staples, Office Depot merger

According to regulatory filings, Starboard took a 5.1% stake in Staples and added to its previously held position in Office Depot, bringing its stake in that chain to approximately 10%. Starboard has held shares of Office Depot since 2012 before the company merged with OfficeMax.

CNBC reports now that according to its sources, Starboard Value now wants to see a merger between Staples and Office Depot. Analysts say if the firm gets its wish and regulators approve a deal, then the combined company could see significant cost savings.

Merger push previously speculated

Prior to CNBC’s report, Fortune and Reuters both reported that analysts were speculating that Starboard might be angling for a merger between Office Depot and Staples. According to Reuters, analyst Gary Balter of Credit Suisse estimates approximately $1.44 billion in total savings if the two office supply chains merge. Balter said in September that a merger between Office Depot and Staples looked “compelling.”

Starboard could indeed get its way with Office Depot, as it now holds two of Office Depot’s board seats. The firm has waged seven proxy battles over the last year, and six of them were to gain board seats. One of the battles was with Office Depot, and Starboard ended up winning three of the ten seats on the office supply chain’s board of directors.

Will regulators let Office Depot merge with Staples?

One issue Staples and Office Depot could have if a merger is proposed is that any potential deal could be blocked by regulators. A key concern in Office Depot’s acquisition of OfficeMax was whether it would reduce competition within the office supply space. Regulators decided then that Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT) and Amazon.com, Inc. (NASDAQ:AMZN) provided enough competition in the space to allow a merger the two chains.

However, it’s possible that even more consolidation in the office supply space could be met with regulatory resistance. At the very least, a proposed merger will likely receive intense regulatory scrutiny.

Shares of Staples, Inc. surged more than 8%, while Office Depot Inc stock climbed more than 13% during regular trading today.