Office Depot To Buy OfficeMax For $1.2 Billion

Office Depot and OfficeMax are teaming up to become more competitive in the office supplies segment.  Office Depot today announced that it will acquire OfficeMax for $1.2 billion. Initially unconfirmed, the deal has now been confirmed, according to Bloomberg.

Currently, Staples holds close to 40% of the office supplies market. The combination of Office Depot (19.2%) and OfficeMax (15.7%) would equal close to 35% of the segment, according to Euromonitor International.

The combination of the two companies is expected to help both Office Depot and


OfficeMax compete more effectively with online retailers and warehouse clubs, among others. The deal is expected to yield up to $600 million in annual cost savings — in the form of general and administrative (G&A) and operating efficiencies —within three years after deal closing (estimated to be completed by the end of 2013).

Neil Austrian of Office Depot and Ravi Saligram of OfficeMax, as well as external candidates, are in the running to be named as the new CEO of the merged companies.

Office Depot , which operates 1,675 stores worldwide, reported sales of $2.6 billion for Q4 2012, down 12% from Q4 2011. Office Depot reported annual sales of approximately $10.7 billion in 2012, down 7% over the previous year.

OfficeMax, which was operating 991stores in the U.S. and Mexico as of April 2011, reported $6.9 million in total sales in 2012, down 2.8% from 2011.

The total office supply industry in the U.S. is estimated to be worth $21 billion, according to IBISWorld’s Office Supply Stores market research report published in January 2013.



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