Office Depot, OfficeMax in Talks to Merge

by Christopher Freeburn | February 19, 2013 9:02 am

Office Depot, OfficeMax in Talks to Merge

Office Max 300x192 Office Depot, OfficeMax in Talks to Merge[1]Shares of Office Depot (NYSE:ODP[2]) and Office Max (NYSE:OMX[3]) soared in pre-market trading on Tuesday after the unnamed sources told the Wall Street Journal that the two office supply retailers were discussing a possible merger[4].

Investors liked the news, sending Office Max shares up more than 20%, while Office Depot shares rocketed almost 30% before the market’s open.

Terms of a potential deal remained unclear, though it would likely be an all stock transaction. Office Max and Office Depot generate about $7 billion and $11.5 billion, respectively, in annual revenue. Office Depot operates 1,675 stores, compared to 900 for Office Max.

Both chains have suffered from a weak economy and competition with other big box retailers including Costco (NASDAQ:COST[5]) and Wal-Mart (NYSE:WMT[6]) in recent years. Their primary segment competitor is Staples (NASDAQ:SPLS[7]).

Last year, Office Depot approved a “poison pill” defense against a hostile takeover after Starboard Value, a hedge fund, acquired a significant stake in the company[8].

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/Office-Max.jpg
  2. ODP: http://studio-5.financialcontent.com/investplace/quote?Symbol=ODP
  3. OMX: http://studio-5.financialcontent.com/investplace/quote?Symbol=OMX
  4. the two office supply retailers were discussing a possible merger: http://online.wsj.com/article/SB10001424127887323495104578312262231011572.html
  5. COST: http://studio-5.financialcontent.com/investplace/quote?Symbol=COST
  6. WMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=WMT
  7. SPLS: http://studio-5.financialcontent.com/investplace/quote?Symbol=SPLS
  8. acquired a significant stake in the company: http://investorplace.com/2012/09/office-depot-pressured-by-activist-hedge-fund-shares-rise/

Source URL: http://investorplace.com/2013/02/office-depot-officemax-in-talks-to-merge/
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