Original Story: bloomberg.com
(Bloomberg) -- A merger of Staples Inc. and Office Depot Inc. may help them weather the competition from online and big-box retailers in a way that RadioShack Corp. couldn’t.
The three companies were all hit hard in the past decade by discount-offering giants such as Amazon.com Inc. and Wal-Mart Stores Inc. Their fates diverged this week. RadioShack is preparing to file for bankruptcy protection, while the other two -- in a less dire situation -- are considering combining. An Atlanta mergers and acquisitions lawyer represents clients in a broad range of asset, stock, and merger transactions, from the perspective of both buyers and sellers.
Staples and Office Depot shares are trading Tuesday at prices they haven’t reached in years as investors show support for their potential merger, which would consolidate the No. 1 and 2 office-supply chains. Analysts estimate $1 billion to $2 billion of costs could be cut through the deal, which may give the combined company some room to lower the prices of its products in hopes of drawing in shoppers.
“From a financial standpoint and from a competition standpoint it makes sense,” Joseph Feldman, an analyst for Telsey Advisory Group in New York, said in a phone interview. “Shareholders on both sides are cheering the deal. It probably would be a good thing to see happen for the industry and for both companies.”
Approval Odds
The question is whether the merger would secure approval from antitrust regulators, though analysts are leaning toward the idea that it can. Office Depot purchased OfficeMax Inc. in 2013, so a subsequent deal between Office Depot and Staples would leave just one major office-supply chain. A San Francisco mergers and acquisitions lawyer is following this story closely.
The companies can argue that the competition is far broader and now includes Amazon, Costco Wholesale Corp., Wal-Mart and Target Corp. That’s something the U.S. Federal Trade Commission -- the same agency that blocked Staples from buying Office Depot in 1997 -- noted in its approval of the OfficeMax acquisition.
“Our decision highlights that yesterday’s market dynamics may be very different from the market dynamics of today,” the FTC said in its closing letter about the Office Depot-OfficeMax transaction in November 2013.
That analysis “doesn’t leave the commission a lot of room” to challenge a Staples merger today, said Morris Bloom, an antitrust lawyer at Axinn, Veltrop, & Harkrider LLP in Washington.
“The fact this merger is of the remaining two office-supplies stores should not lead to anticompetitive effects because consumers have more choices than the super-supply stores,” said Bloom, a former FTC lawyer.
Activist Push
Starboard Value, which has stakes in both Staples and Office Depot, has been urging the retailers to combine, which has helped lift the shares over the past couple of months.
The FTC’s decision to allow Office Depot and OfficeMax to combine “probably encouraged Starboard to push for the merger,” said Chris Pultz, a portfolio manager at Kellner Capital, an event-driven investment firm in New York. “They will probably get a second request from the FTC, but I find it hard to believe that they would have a case to block the transaction.”
Staples shares climbed 11 percent Tuesday to $19.01. Office Depot surged 22 percent to $9.28.
Becoming one company isn’t a perfect long-term solution. Even though their outlook isn’t nearly as grim as RadioShack’s, office and school supplies are increasingly a commodity business and it will still be difficult to match competitors’ low prices without eroding earnings, said Brian Yarbrough, an analyst for Edward Jones & Co. in St. Louis. A Boston mergers and acquisitions lawyer provides extensive experience in many aspects of merger and acquisitions law.
In the most recent back-to-school shopping season, Staples’ school supplies cost 53 percent more than an identical basket of goods at Wal-Mart and Target, according to a study by Bloomberg Intelligence in August.
Deal Gains
Shareholders would benefit from a deal because it would give a pop to Office Depot’s stock price and there would be synergies for Staples, Yarbrough said.
“But in the longer run, I just don’t see how this combined company is any better off,” he said. “Starboard cares about one thing: this deal going through. Five years down the road they’re not going to be anywhere near this company, they’ll be long gone.”
And don’t forget what happened after Sears Holdings Corp. and Kmart merged in 2005. The deal which was managed by several accounting firms including a leading CPA firm in LA was an attempt to stem falling sales and fend off Wal-Mart. Since that transaction closed, Sears has lost three-quarters of its value, continued to suffer revenue declines, shut stores, eliminated jobs and sold off assets to raise money as it burns through cash.
“Merging two bad retailers in a tough environment doesn’t make one good retailer,” Yarbrough said.
Showing posts with label Office Depot. Show all posts
Showing posts with label Office Depot. Show all posts
Tuesday, February 10, 2015
Wednesday, February 20, 2013
Amid Merger Reports Shares Soar for OfficeMax & Office Depot
Story first appeared on the Chicago Tribune -
Shares in Naperville-based OfficeMax Inc. soared 20 percent Tuesday on a report it is in advanced merger talks with Office Depot Inc.
And Office Depot shares were up 9 percent after the Wall Street Journal reported the two companies were in advanced discussions, citing person familiar with the negotiations, with a deal possible as early as this week.
Currently, the deal is expected to be structured as a stock-for-stock transaction, the person said.
Neither company responded to requests seeking comment.
One of OfficeMax's top shareholders, Neuberger Berman, said it would support a merger with Office Depot depending on terms of the deal, according to a portfolio manager at the firm.
Responding to media reports, Benjamin Nahum of Neuberger Berman, told Reuters in an interview that his preference would be for OfficeMax to declare a special dividend before merging with Office Depot. "In our view this would facilitate a fair deal."
Neuberger Berman said OfficeMax shareholders should be compensated for "the balance sheet strength that we bring to this combined entity."
The news came months after the investment firm called on the third-largest U.S. office supply chain to return money to shareholders in the form of a dividend or share repurchases and raised the specter of a proxy fight next year if the retailer fails to comply.
According to Thomson Reuters' data, Neuberger Berman owns 4.76 percent of OfficeMax, making it the third-largest shareholder of the Naperville company.
OfficeMax is expected to report its quarterly earnings on Thursday.
While the pair up had been rumored for years, one analyst said Monday that he believed a deal was less likely after a report last week that Office Depot is in talks to sell its remaining 50 percent stake in its Mexican operations.
Scott Tilghman, an analyst with investment firm B. Riley & Co. said that similarities in the pair’s U.S. and Mexican operations were thought to be a cornerstone of the consideration to combine.
But even if Office Depot does sell its Mexican stake, Tilghman said a deal would still make sense as both companies struggle to gain traction against competitor Staples Inc. and sites like Amazon.com.
By combining, the pair could cut costs by shedding stores and streamlining operations without having to raise prices. Tilghman estimates the companies could get rid of 20 percent of their combined stores and still hold onto customers.
Both companies have struggled in recent years from declining revenue in their retail stores. In OfficeMax’s most recent quarter, it was able to grow net income by cutting costs despite lower revenue. Slumping retail sales were somewhat offset by OfficeMax’s U.S. contract business, where it works directly with businesses to help operate more efficiently and reduce office expenses.
If combined, OfficeMax and Office Depot, the world’s second and third largest office products companies by revenue, would still not eclipse the segment’s largest business, Staples Inc.
Office Depot, based in Boca Raton, Florida, has 1,675 stores world-wide, annual sales of about $11.5 billion and some 39,000 employees, the Journal said. OfficeMax, operates roughly 900 stores in the United States and Mexico, generates about $7 billion in annual sales and has 29,000 employees, the Journal said.
Shares of OfficeMax closed at $13, up $2.25 Tuesday on the New York Stock Exchange. Shares of Office Depot rose 42 cents to close at $5.02.
Shares in Naperville-based OfficeMax Inc. soared 20 percent Tuesday on a report it is in advanced merger talks with Office Depot Inc.
And Office Depot shares were up 9 percent after the Wall Street Journal reported the two companies were in advanced discussions, citing person familiar with the negotiations, with a deal possible as early as this week.
Currently, the deal is expected to be structured as a stock-for-stock transaction, the person said.
Neither company responded to requests seeking comment.
One of OfficeMax's top shareholders, Neuberger Berman, said it would support a merger with Office Depot depending on terms of the deal, according to a portfolio manager at the firm.
Responding to media reports, Benjamin Nahum of Neuberger Berman, told Reuters in an interview that his preference would be for OfficeMax to declare a special dividend before merging with Office Depot. "In our view this would facilitate a fair deal."
Neuberger Berman said OfficeMax shareholders should be compensated for "the balance sheet strength that we bring to this combined entity."
The news came months after the investment firm called on the third-largest U.S. office supply chain to return money to shareholders in the form of a dividend or share repurchases and raised the specter of a proxy fight next year if the retailer fails to comply.
According to Thomson Reuters' data, Neuberger Berman owns 4.76 percent of OfficeMax, making it the third-largest shareholder of the Naperville company.
OfficeMax is expected to report its quarterly earnings on Thursday.
While the pair up had been rumored for years, one analyst said Monday that he believed a deal was less likely after a report last week that Office Depot is in talks to sell its remaining 50 percent stake in its Mexican operations.
Scott Tilghman, an analyst with investment firm B. Riley & Co. said that similarities in the pair’s U.S. and Mexican operations were thought to be a cornerstone of the consideration to combine.
But even if Office Depot does sell its Mexican stake, Tilghman said a deal would still make sense as both companies struggle to gain traction against competitor Staples Inc. and sites like Amazon.com.
By combining, the pair could cut costs by shedding stores and streamlining operations without having to raise prices. Tilghman estimates the companies could get rid of 20 percent of their combined stores and still hold onto customers.
Both companies have struggled in recent years from declining revenue in their retail stores. In OfficeMax’s most recent quarter, it was able to grow net income by cutting costs despite lower revenue. Slumping retail sales were somewhat offset by OfficeMax’s U.S. contract business, where it works directly with businesses to help operate more efficiently and reduce office expenses.
If combined, OfficeMax and Office Depot, the world’s second and third largest office products companies by revenue, would still not eclipse the segment’s largest business, Staples Inc.
Office Depot, based in Boca Raton, Florida, has 1,675 stores world-wide, annual sales of about $11.5 billion and some 39,000 employees, the Journal said. OfficeMax, operates roughly 900 stores in the United States and Mexico, generates about $7 billion in annual sales and has 29,000 employees, the Journal said.
Shares of OfficeMax closed at $13, up $2.25 Tuesday on the New York Stock Exchange. Shares of Office Depot rose 42 cents to close at $5.02.
Monday, March 22, 2010
Office Depot Announces Major Environmental Initiative to Open "Green" Retail Stores
Market Watch
Success of Company's First LEED Gold-Certified Store in Austin, TX, Propels Certification for All New Stores Beginning June 2010
Office Depot, a leading global provider of office products and services, today announced that the Company will pursue Leadership in Energy and Environmental Design (LEED) for Commercial Interiors (CI) certification from the U.S. Green Building Council (USGBC) for all new Office Depot retail stores, beginning in June 2010. LEED CI is the recognized system for certifying high-performance green interiors that are healthy, productive places to work; are less costly to operate and maintain; and have a reduced environmental footprint. Realizing that the Company does not always have control of the building -- especially when occupying an existing site -- Office Depot will make sustainable choices wherever possible and seek LEED CI certification.
Office Depot, a leading global provider of office products and services, today announced that the Company will pursue Leadership in Energy and Environmental Design (LEED) for Commercial Interiors (CI) certification from the U.S. Green Building Council (USGBC) for all new Office Depot retail stores, beginning in June 2010. LEED CI is the recognized system for certifying high-performance green interiors that are healthy, productive places to work; are less costly to operate and maintain; and have a reduced environmental footprint. Realizing that the Company does not always have control of the building -- especially when occupying an existing site -- Office Depot will make sustainable choices wherever possible and seek LEED CI certification.
"As a retailer with store locations opening around the country, we have a great opportunity to make a difference on the overall environmental footprint of today's businesses," said Chuck Rubin, President of North American Retail for Office Depot. "Office Depot takes that role very seriously and have therefore decided to LEED CI certify all of our new store locations going forward. We are confident that this initiative will benefit our customers, associates, suppliers and other stakeholders."
According to Rubin, 14 new Office Depot store locations will be LEED CI certified, starting with the Company's newest location in Austin, TX, which is scheduled to open in June 2010. At each of these locations, Office Depot will look to mirror the impressive energy and monetary savings seen at Office Depot's first LEED Gold-Certified store in Austin, TX, which opened in April 2008.
"The energy savings realized at our first Austin store location has been even greater than what we had originally expected," said Edward Costa, Vice President of Construction for Office Depot. "We intend to continue to make our stores as energy efficient, water efficient and cost efficient as possible. With LEED CI we are now able to 'green' all of our store locations -- regardless of whether we build it ourselves or take over an existing building."
Office Depot LEED CI Green Store Highlights
Features of all new Office Depot LEED CI certified stores will include:
-- Preferred parking designated for low-emitting, fuel efficient vehicles and carpooling.
-- Skylights (where applicable) will be used to harvest daylight for 90% of the store.
-- Reflective roof which features a membrane that helps to prevent absorption of the heat from the sun and keeps the interior of the store much cooler.
-- Energy Star rated HVAC equipment that exceeds ASHRAE standards.
-- T5 energy-efficient lighting, which is over 30% more efficient than typical retail lighting and will contribute to over 20% reduction in energy use.
-- Daylight and occupancy sensors which reduce energy use.
-- Water conservation interior fixtures, including tankless instant hot water heaters, low flush toilets, low flow urinals, and automatic shutoff sensors in restrooms that will use over 30% less water than the typical facility.
-- Construction waste that will be recycled when waste recycling is available.
-- Construction materials that consist of at least 10% recycled content.
-- Wood, 50% of which will come from well managed forests verified by the Forest Stewardship Council.
-- All interior finishes are made up low VOC emitting materials and finishes.
-- Green Power purchases supplementing electrical use.
-- An Energy Management System that allows tracking of energy usage and trends from one central location.
-- 100% Energy Star rated building equipment and kitchen appliances.
-- Office supplies, technology and furniture featuring a range of green attributes, including recycled content, remanufactured, Energy Star rated and non-toxic.
-- An in-store Recycling Center with environmental solutions including Office Depot Ink and Toner Cartridge Recycling, Tech Recycling Service and Cell Phone and Rechargeable Battery Recycling.
Yalmaz Siddiqui, Director of Environmental Strategy for Office Depot added: "Office Depot has an environmental strategy to increasingly buy green, be green and sell green. By incorporating a leading green building commitment to this strategy, we will continue to lead our industry, and deliver environmental and economic benefits to our company."
About Office Depot
Every day, Office Depot is Taking Care of Business for millions of customers around the globe. For the local corner store as well as Fortune 500 companies, Office Depot provides products and services to its customers through 1,670 worldwide retail stores, a dedicated sales force, top-rated catalogs and a $4.9 billion e-commerce operation. Office Depot has annual sales of approximately $15.5 billion, and employs about 49,000 associates around the world. The Company provides more office products and services to more customers in more countries than any other company, and currently sells to customers directly or through affiliates in 43 countries.
About USGBC
The U.S. Green Building Council is a nonprofit membership organization whose vision is a sustainable built environment within a generation. Its membership includes corporations, builders, universities, government agencies, and other nonprofit organizations. Since USGBC's founding in 1993, the Council has grown to include more than 13,500 member companies and organizations, a comprehensive family of LEED(R) (Leadership in Energy and Environmental Design) green building rating systems, an expansive educational offering, the industry's popular Greenbuild International Conference and Expo (www.greenbuildexpo.org), and a network of 72 local chapters, affiliates, and organizing groups. For more information, visit www.usgbc.org. The LEED Green Building Rating System(TM) encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria.
According to Rubin, 14 new Office Depot store locations will be LEED CI certified, starting with the Company's newest location in Austin, TX, which is scheduled to open in June 2010. At each of these locations, Office Depot will look to mirror the impressive energy and monetary savings seen at Office Depot's first LEED Gold-Certified store in Austin, TX, which opened in April 2008.
"The energy savings realized at our first Austin store location has been even greater than what we had originally expected," said Edward Costa, Vice President of Construction for Office Depot. "We intend to continue to make our stores as energy efficient, water efficient and cost efficient as possible. With LEED CI we are now able to 'green' all of our store locations -- regardless of whether we build it ourselves or take over an existing building."
Office Depot LEED CI Green Store Highlights
Features of all new Office Depot LEED CI certified stores will include:
-- Preferred parking designated for low-emitting, fuel efficient vehicles and carpooling.
-- Skylights (where applicable) will be used to harvest daylight for 90% of the store.
-- Reflective roof which features a membrane that helps to prevent absorption of the heat from the sun and keeps the interior of the store much cooler.
-- Energy Star rated HVAC equipment that exceeds ASHRAE standards.
-- T5 energy-efficient lighting, which is over 30% more efficient than typical retail lighting and will contribute to over 20% reduction in energy use.
-- Daylight and occupancy sensors which reduce energy use.
-- Water conservation interior fixtures, including tankless instant hot water heaters, low flush toilets, low flow urinals, and automatic shutoff sensors in restrooms that will use over 30% less water than the typical facility.
-- Construction waste that will be recycled when waste recycling is available.
-- Construction materials that consist of at least 10% recycled content.
-- Wood, 50% of which will come from well managed forests verified by the Forest Stewardship Council.
-- All interior finishes are made up low VOC emitting materials and finishes.
-- Green Power purchases supplementing electrical use.
-- An Energy Management System that allows tracking of energy usage and trends from one central location.
-- 100% Energy Star rated building equipment and kitchen appliances.
-- Office supplies, technology and furniture featuring a range of green attributes, including recycled content, remanufactured, Energy Star rated and non-toxic.
-- An in-store Recycling Center with environmental solutions including Office Depot Ink and Toner Cartridge Recycling, Tech Recycling Service and Cell Phone and Rechargeable Battery Recycling.
Yalmaz Siddiqui, Director of Environmental Strategy for Office Depot added: "Office Depot has an environmental strategy to increasingly buy green, be green and sell green. By incorporating a leading green building commitment to this strategy, we will continue to lead our industry, and deliver environmental and economic benefits to our company."
About Office Depot
Every day, Office Depot is Taking Care of Business for millions of customers around the globe. For the local corner store as well as Fortune 500 companies, Office Depot provides products and services to its customers through 1,670 worldwide retail stores, a dedicated sales force, top-rated catalogs and a $4.9 billion e-commerce operation. Office Depot has annual sales of approximately $15.5 billion, and employs about 49,000 associates around the world. The Company provides more office products and services to more customers in more countries than any other company, and currently sells to customers directly or through affiliates in 43 countries.
About USGBC
The U.S. Green Building Council is a nonprofit membership organization whose vision is a sustainable built environment within a generation. Its membership includes corporations, builders, universities, government agencies, and other nonprofit organizations. Since USGBC's founding in 1993, the Council has grown to include more than 13,500 member companies and organizations, a comprehensive family of LEED(R) (Leadership in Energy and Environmental Design) green building rating systems, an expansive educational offering, the industry's popular Greenbuild International Conference and Expo (www.greenbuildexpo.org), and a network of 72 local chapters, affiliates, and organizing groups. For more information, visit www.usgbc.org. The LEED Green Building Rating System(TM) encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria.
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