Report: Office Depot, OfficeMax in merger talks
By Jay Keller
The Wall Street Journal reported on Monday that executives were engaged in advanced talks to merge the companies in what’s expected to be a stock-for-stock deal.
Sources familiar with the matter told the Wall Street Journal that announcement is expected as early as this week a deal that could reshape the retail landscape for the pen, paper and desk market.
Neither Office Depot or OfficeMax issued any announcements regarding the talks or provided any comment regarding the report by the Wall Street Journal.
Office-supply retailers in recent years have faced challenges with the rise of online sales and the fact that many of the brick-and-mortar retail locations often carry too much inventory.
With this, the digital age brings with it a shrinking of the marketplace and with it the demand for paper products and office furniture.
The U.S. Federal Trade Commission in 1997 blocked a merger attempt between Staples and Office Depot.
The FTC was concerned that the merger, if approved, would deprive the market of fair competition and drive prices higher than before with most impact being shouldered by customers.
The rise of wholesale retailers like Costco and Sam’s Club since the deal was blocked in 1997 cut deeply into the profit margins of the office superstore.
Office Depot’s market value is just $1.3 billion while OfficeMax’s is about $933 million, according to the report.
Office Depot, Inc. was first incorporated in 1986 with the opening of the first retail store in Fort Lauderdale, Fla. and has sold $11.5 billion worth of products and services through FY2011.
OfficeMax Incorporated, formerly Boise Cascade Corporation, was first incorporated in 1951 and became an independent office products distribution company in 2004.
OfficeMax reports sales upward of $4 billion and employs more than 29,000 associates through direct sales, catalogs, online and at more than 900 retail locations throughout the U.S.