OfficeMax, Office Depot in talks for possible merger
New York, NY, United States (4E) – OfficeMax and Office Depot, currently the second and third biggest office-supplies retailers in the U.S., are reportedly planning to merge.
No specific terms were yet released about the deal like how much of the merged company shareholders will own, although the transaction is likely to be stock-for-stock. The deal is not yet final and there is still a possibility that the talks could collapse. People familiar with the deal, however, say that an announcement could come as early as this week.
Office Depot operates 1,262 stores globally, although just 131 of those are based outside of the U.S. The company employs 39,000 employees, and sales reached $11.5bn in 2011, the last time it reported full year results.
The talks come as mergers and acquisitions (M&A) deals involving U.S. companies are on the rise. Last week, US Airways announced it was merging with American Airlines parent firm AMR, Warren Buffett’s Berkshire Hathaway and Brazil’s 3G Capital said it was taking over ketchup maker Heinz, and Comcast unveiled its plan to buy from General Electric the remaining 49 per cent stake it still does not own of NBC Universal for $16.7bn.
Both Office Depot and OfficeMax are trailing Staples, which has 2,248 stores throughout the world with sales of $25bn in 2011. Staples, however, is also facing increased competition from online-based retailers like Amazon.
The digital age has threatened the office-supply chains as their large number of stores carry too much inventory, hurting their competitiveness in the new marketplace.