Office Depot announced that it has agreed to buy OfficeMax for $1.17 million in hopes to revive itself after a continuing loss of sales to online rivals and Staples. Under the terms of the agreement, OfficeMax stockholders will receive 2.69 shares of Office Depot for each of their OfficeMax shares.
“In the past decade, with the growth of the internet, our industry has changed dramatically. Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors, and increase stockholder value,” said Neil Austrian, Chairman and CEO of Office Depot.
The combined organization has over 2,500 locations worldwide (approx. 1,675 Office Depot and 900 OfficeMax locations), with the majority of its presence in the United States and Mexico. It is a sure bet, however, that a number of locations will be closed or sold – in fact, industry experts are predicting that they will shutter over 20% of their stores. With both an Office Depot and OfficeMax in St. Cloud, it is likely that one location, presumably OfficeMax, will cease operations after the completion of the merger.
“We are excited to bring together two companies intent on accelerating innovation for our customers and better differentiating us for success in a dynamic and highly competitive global industry,” said Ravi Saligram, President and CEO of OfficeMax. “We are confident that there will be exciting new opportunities for employees as part of a truly global business. Together, we will have the opportunity to build on our strong digital platforms and to expand our multichannel capabilities to better serve our customers and to compete more effectively. Importantly, this merger of equals transaction will provide stockholders of both companies with a compelling opportunity to participate in the long-term upside potential of the combined company.”
The merger transaction is expected to close by the end of 2013, subject to a variety of closing conditions such as stockholder and regulatory approval. Until then, OfficeMax and Office Depot will remain separate companies.