OfficeMax and Office Depot Merger

OfficeMax and Office Depot Confirm Merger
As reported by Crain’s Chicago Business
(AP) — Office Depot Inc. said Wednesday it will buy OfficeMax in an all-stock deal that would transform the office-supply retail sector.
There was some confusion about the deal Wednesday morning when Office Depot reported terms of the deal in a release on its Web site early Wednesday and then removed it, before restoring it after the market opened.
Boca Raton, Fla.-based Office Depot Inc. and Naperville-based OfficeMax said holders of OfficeMax shares will receive 2.69 shares of Office Depot for every OfficeMax share they own.
That’s equal to about $13.50 per share, based on Office Depot’s $5.02 per share closing price Tuesday, giving the deal a total value of about $1.2 billion. OfficeMax had about 86.7 million shares outstanding as of Oct. 26, according to SEC filings. It is a 3.8 percent premium to OfficeMax’s closing price of $13 on Tuesday and a 26 percent premium to OfficeMax’s closing price on Friday, before word of negotiations leaked out.
In a letter to customers posted on OfficeMax’s website, CEO Ravi Saligram called the deal “a merger of equals” and said the transaction is expected to close by the end of the year. “As a combined company, OfficeMax and Office Depot will be better positioned to meet the needs of business customers ranging from the sole proprietor and small business owner to multinational businesses,” he wrote.
Office Depot’s largest shareholder, BP Partners, has agreed to vote in favor of the merger, the companies said.
Office Depot CEO Neil Austrian and Mr. Saligram will remain in their current positions until a search process for a new CEO is completed, Mr. Saligram said in a conference call. The search team will combine an equal number of board members from each company.
The move would combine the No. 2 and No. 3 office supply retailer and lead to consolidation in an industry that analysts have said for years has too many stores. It reflects the changing retail landscape as “big box” stores become outmoded and more people shop online.