February 21, 2013
Office Depot and OfficeMax announced the signing of a merger agreement which will see the companies combine in an all-stock merger of equals transaction with the intention of qualifying as a tax-free organisation, creating a “stronger, more efficient global provider” that is better able to compete in the rapidly changing office solutions industry.
The merger was unanimously approved by the Board of Directors for both companies, and will allow customers to benefit from “enhanced offerings across multiple distribution channels and geographies”, with the new company expected to have significantly improved financial strength and flexibility.
Based on the annual revenue in 2012 of both companies, the pro forma combined revenue could have been approximately $18 billion (€13.6 billion), and under the terms of the agreement, OfficeMax stockholders will receive 2.69 Office Depot common shares for each share of OfficeMax common stock.
Key strategic benefits of the merger listed by the companies include enhanced financial performance, strength and flexibility with an estimated $1 billion (€758 million) available cash on hand; significant synergy opportunities of $400 to $600 million (€303 million to 455 million) annual cost synergies by the third year; increased scale and competitiveness; the ability to serve more customers globally; improved customer experience to build brand loyalty; accelerated innovation; and equal representation and governance rights on the combined company’s Board of Directors, including equal input in key decisions.
Commenting on the merger, Neil Austrian, Chairman and CEO of Office Depot, said: “In the past decade, with the growth of the internet, our industry has changed dramatically. Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors, and increase stockholder value.
“Office Depot and OfficeMax share a similar vision and culture, and will greatly benefit from drawing on the industry’s most talented people, combining our best practices and realizing significant savings. We are confident that this merger of equals represents a new beginning for our two companies and will allow us to build a more competitive enterprise for the long term.”
Also speaking on the transaction, Ravi Saligram, President and CEO of OfficeMax, commented: “We are excited to bring together two companies intent on accelerating innovation for our customers and better differentiating us for success in a dynamic and highly competitive global industry. We are confident that there will be exciting new opportunities for employees as part of a truly global business. Together, we will have the opportunity to build on our strong digital platforms and to expand our multichannel capabilities to better serve our customers and to compete more effectively. Importantly, this merger of equals transaction will provide stockholders of both companies with a compelling opportunity to participate in the long-term upside potential of the combined company.”
Categories : World Focus