Chances are, you’ve probably seen something about the pending merger of Office Max and Office Depot in the news or on TV. This is a big deal as there are two of major players in the office supply industry, and the story has made both national and international news.
So exactly what is happening?
Unless the latest publicly announced merger deal changes, here’s what will happen: OfficeMax shareholders will receive 2.69 shares of Office Depot stock for each OfficeMax share they own. The entire deal is based on stock and no money will change hands. At the time of this post, a new CEO and potential company name have yet to be announced.
Most industry insiders feel that it’s attempt to gain ground on industry giant Staples, and online superstore Amazon, which has be gaining a foothold in the office supply industry. Once the merger is completed, the new, yet to be named entity will be the “largest” office supply company in the US with 2,000 brick and mortar stores compared to the 1900 stores owned by Staples. Interestingly enough, the combined sales revenue from both only accounts for about 70% of Staples reported earnings.
If you jump back in time to 1997, a similar proposed merger between Office Depot and Staples was blocked by the Federal Trade Commission with a decision that was loosely based in popular anti-trust rhetoric of that time. Since the current merger isn’t completed, it’s possible that the FTC will take some action against this merger as well.
Here are some other resources with information about the proposed merger:
Office Depot, OfficeMax to merge – CBS News
Office Depot, OfficeMax merger is about survival
OfficeMax, Office Depot Talk Merger – Struggling firms seek boost against, you know, Amazon
Twitter talk about the merger:
@HuffPostBiz
Report: Office Depot, Office Max merger announced prematurely http://t.co/f3xXfaOB
@USRadioNews
Plz flw @PatriotRadioNet: Office Depot And Office Max In Serious Talks About A Merger – http://t.co/TQjLZK4be2
@gregrocs
Simple #infographic on the Office Depot-Office Max merger compared to Staples http://t.co/2r9IxSiFPN
The jury is still out on the actual merger being completed and who the real winner is? Many industry analysts are reporting that Staples may be the real winner is this deal as it’s expected that the new merger company will begin closing unprofitably or under-performing stores, which leaves Staples as the only standalone “big box” OP retailer in those locations.
