Office Depot, OfficeMax announce merger
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NEW YORK, Feb 20 AFP
February 21 2013, 03:30AM
Office Depot and OfficeMax have announced a merger to create a US office-supplies retail giant better designed for an increasingly competitive retail landscape.
The companies described the agreement as a "merger of equals." OfficeMax shareholders will receive 2.69 Office Depot shares for each share of their common stock.
The joint announcement confirmed the merger which had been prematurely announced earlier in the day.
Each company will have an equal number of members on the board of directors of the combined company, which would have had $US18 billion ($A17.47 billion) in revenues at the end of last year.
The companies said the merger would result in $US400-$US600 million in annual cost synergies. Other benefits include greater cash firepower. The combined company would have more than $US1 billion in cash on hand and more than $US1 billion through available credit facilities.
The merger was expected to close by the end of 2013, subject to shareholder and regulatory approvals, they said.
The merger comes as both companies face growing competitive pressure not only from retailers like Staples, but from internet stores like Amazon.
"In the past decade, with the growth of the internet, our industry has changed dramatically," Office Depot chief executive Neil Austrian said in a joint news release on Wednesday.
"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 shareholder value."
The new company's leadership will be determined by a selection committee made up of an equal number of independent board members from each company. Both incumbent chief executives, as well as external candidates, will be considered, the statement said.
Wednesday's official announcement of the merger was preceded by a number of US media reports before the markets opened that said a $US1.2 billion deal had been struck. However, the reports appeared to have been based on an Office Depot news release that was later removed from the company's website.