Office Depot and Office Max announced Wednesday morning that the two companies will merge for an all-stock $1.2 billion deal.
The deal is being considered a merger and not an acquisition, but Office Depot’s shares would equal 56 percent of the new firm and 44 percent would be own by Office Max shareholders. The announcement was prematurely announced after the Webcast provider accidentally issued a press release prior to the scheduled event. Oops.
The deal is pending administrative approval, but is expected to go through without much opposition. Office Depot attempted to purchase Staples in the ’90s, but was ultimately blocked after concerns of anti-trust issues. However, supply chain concerns that prevented that deal to go through have changed significantly in the 20 years since. Office supply stores don’t hold the same cachet or strong hold as they once used to. Office Depot and OfficeMax has faced stiff competition from Staples, big box stores and online retailers, with revenue steadily dropping for many years. One could argue these stores fell out of relevance and while big box stores and online retailers were able to cash in on more profitable electronics, office supply stores were left hocking reams of paper, paper clips and printer ink.
No news yet as to which CEO will assume the position in the new company or where the company’s headquarters will be based. One thing we are fairly certain will happen, as is with most retail mergers, we will likely see a number of Depot-Max stores closing.