Office Depot, OfficeMax talk merger
Both chains have struggled against Costco and Amazon since the 2008 market crash, and they might announce a deal this week. Two probable results are closed stores and job losses.
The Wall Street Journal reported Monday that OfficeMax (OMX) and Office Depot (ODP) are discussing a merger that may be announced later this week.
The deal would probably be a stock swap, but, the Journal said, the terms weren't clear. Odds are that costs would be cut sharply, with payrolls trimmed and a number of stores closed.
Investors and analysts have been talking for some time about how a merger of the two companies might be a natural, if only because the shares of both have been so badly damaged in recent years.
Office Depot shares lost nearly 98% of their value between May 2006 and the market bottom in 2009.OfficeMax shares lost 96% of their value between February 2007 and the 2009 bottom. OfficeMax shares closed at $10.75 on Friday, up 40% this year; OfficeMax closed at $4.59. The shares are up 10.1% this year.
Their market capitalizations of the companies are a combined $2.2 billion, $1.3 billion for Office Depot and $900 million for OfficeMax. In 2006, the market caps totaled $13 billion, according to Wikinvest.com.
Both companies have struggled against industry leader Staples (SPLS), and all three have struggled against competition from Costco Wholesale (COST), Wal-Mart Stores (WMT), Target (TGT) and Amazon.com (AMZN).
In addition, Office Depot has been under pressure from activist investor Starboard Value, its biggest shareholder, to boost returns. Starboard, which has a 14.8% stake in Office Depot, has called for a deal with OfficeMax.
The office supply chains are casualties of the digital age, The Journal noted. There are "too many stores carrying too much inventory in spaces that are too large for the new marketplace."
Office Depot has some 1,600 stores and 39,000 employees; OfficeMax has 900 stores and 29,000 employees. Staples has around 2,000 stores but has committed to close some 46 locations, mostly in Europe, and end its European special delivery business.
The trio have danced around each other for years. Staples and Office Depot, in fact, negotiated a merger that the Justice Department blocked in 1997.
OfficeMax shares are up 94% over the last year thanks in part to speculation about a deal. Office Depot shares are up 50.5% over the last year.
Staples shares are down 15.9% in the last year. Bain Capital, a company founded by former Republican presidential candidate Mitt Romney, helped get Staples started in 1986.
More on moneyNOW
They are both over priced on their items. The cost of copy paper is almost out of reach. Both have their own brand of ink but they are not always workable on your name brand copier. They are almost the price of the brand name. They are going to out price the same paper and ink you buy thru HP co. it self. I mean come on $15.00 off a $100.00 purchase. They can do better than that.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Both lawmakers voted against aid for Superstorm Sandy victims before accepting funds to help their own tornado-ravaged state.
- New Jersey bar sting turns up 'swill'
- Charles Ramsey gets burgers for life, but no Big Macs
- Shotgun wedding for Saks and Neiman Marcus?
- Yum aims to fatten up by doubling Taco Bell sales
- Mike Bloomberg's next career: Taxi magnate?
- At software giant SAP, autism is an asset
- Target blames weather for soggy results
- Chick-fil-A thrown back into gay marriage debate
- Oklahoma tornado losses could top $2 billion
- July crude oil traded in negative territory today following China's HSBC Flash Manufacturing PMI data that showed a first contractionary reading in seven months. The energy component dipped to a session low of $92.21 per barrel in morning action but managed to erase most of the earlier losses as prices rallied to a session high of $94.35 per barrel heading into the close. Crude oil settled just 0.1% lower at $94.14 per barrel.
- June natural gas opened floor trade in ... More
More Market News
With Europe mired in recession, China faltering, commodities declining and stocks looking vulnerable, investors seeking safety will look to the greenback.