OfficeMax Now Office Depot, Boca Remains Home

Office Depot

Merger with OfficeMax is complete, Boca remains HQ.

BOCA RATON, FL (BocaNewsNow.com) — The merger of OfficeMax and Office Depot is complete, with Boca remaining home base for what is now Office Depot, Inc.

From the newly formed company:

Office Depot, Inc. and OfficeMax Incorporated today announced the completion of their merger of equals, creating a stronger, more competitive and more efficient global provider of office products, services and solutions. The combined company will use the name Office Depot, Inc. and will trade on the New York Stock Exchange under the symbol ODP.

Office Depot, Inc. is a single source for everything customers need to make their workplaces more productive, including the latest technology, core office supplies, print and document services, business services, facilities products, furniture, and school essentials.

The new Office Depot, Inc., which would have had combined revenue for the 12 months ended September 28, 2013 of approximately $17 billion, now employs about 66,000 associates worldwide. The company serves consumers and businesses in 59 countries with more than 2,200 retail stores, award-winning e-commerce sites, and a dedicated business-to-business sales organization – all delivered through a global network of wholly owned operations, joint ventures, franchisees, licensees and alliance partners. The company's portfolio of leading brands includes Office Depot, OfficeMax, OfficeMax Grand & Toy, Viking, Ativa, TUL, Foray, and DiVOGA.

Customers can interact with each brand as they always have, including shopping at Office Depot and OfficeMax stores and online at www.officedepot.com and www.officemax.com. Each company will maintain its respective loyalty programs and expects to announce a combined loyalty program sometime in 2014.

Austrian and Saligram to Serve as Co-CEOs

According to the CEO Selection Committee, the uncertainty surrounding the timing and any potential conditions of the Federal Trade Commission approval made it challenging for the search to be finalized in time to coincide with the closing of the merger. The CEO Selection Committee is hopeful of completing the process in the near future, now that unconditional FTC clearance has been obtained.

In the interim, as stated in the merger agreement, Neil Austrian, Chairman and CEO of Office Depot, and Ravi Saligram, President and CEO of OfficeMax, will serve together as co-CEOs, executing the integration plans they and their teams have built to combine the two businesses.

The company will continue to operate in both Boca Raton, Florida and Naperville, Illinois until the new CEO is on board and a decision on a headquarters location is finalized.

Board of Directors Named for New Company

Office Depot, Inc. also announced the members of its new Board of Directors. Aside from Saligram and Austrian, the 12-person board includes five independent directors from each of the Office Depot and OfficeMax Boards. Additional Directors are Warren Bryant, Rakesh Gangwal, Cynthia Jamison, Jim Marino, Michael Massey, Francesca Ruiz de Luzuriaga, Jeff Smith, David Szymanski, Nigel Travis and Joseph Vassalluzzo. Travis and Gangwal will serve as Co-Chairmen/Co-Lead Directors.

The newly appointed Board members bring a wide variety of expertise, qualifications, attributes and skills to the governance of the combined company.

Update to Synergy Benefits and One-Time Merger Costs

The combined company will have significantly improved financial strength and flexibility, with the ability to deliver long-term operating performance improvements through its increased competitiveness.

As a result of the detailed integration planning that has been performed so far, total estimated annual cost synergies by the end of the third year following the close of the merger are now expected to be in the upper half of the previously estimated $400-$600 million range. This excludes any potential synergies from approximately $2 billion of other operating expenses related to retail stores that have not yet been evaluated, as well as any potential working capital savings that may result from vendor or supply chain facility consolidation.

The combined company expects to incur a total of approximately $200 million in one-time operating costs in 2013 related to the merger and up to an additional $400 million in integration costs and approximately $200-$250 million in capital spending over the next three years in order to realize the estimated synergies.

Transaction Information

In accordance with the terms of the merger agreement, OfficeMax shareholders will receive 2.69 shares of Office Depot, Inc. common stock in exchange for each share of OfficeMax common stock. OfficeMax is now a wholly owned subsidiary of Office Depot, Inc. and will no longer be publicly traded. In total, approximately 240 million shares of Office Depot, Inc. common stock were issued to OfficeMax shareholders, representing approximately 45 percent of the 530 million total shares outstanding.

As of September 28, 2013, and before the redemption of the BC Partners' interest, the combined company would have had approximately $1.2 billion in cash. Effective with the merger closing, the company also increased the size of the existing Office Depot, Inc. Amended and Restated Credit Agreement to $1.25 billion. With total liquidity approaching $2.5 billion before the redemption of BC Partners' interest, the newly combined company will have a strong financial foundation for the future.

In conjunction with the closing of the transaction, Office Depot, Inc. also paid $218 million to fully redeem the ODP preferred shares that were held by BC Partners.

 

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