Neil Austrian and Ravi Saligram to Serve as Co-CEOs
Board of Directors for New Company Named
Updates Synergy Benefits and One-Time Merger Costs
Focus is Now on Executing Integration Plans and Delivering Synergies
BOCA RATON, Fla. & NAPERVILLE, Ill.--(BUSINESS WIRE)--Nov. 5, 2013--
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.
About Office Depot, Inc.
Formed by the merger of Office Depot and OfficeMax, Office Depot, Inc.
is a leading global provider of products, services, and solutions for
every workplace – whether your workplace is an office, home, school, or
car.
Office Depot, Inc. is a resource and a catalyst to help customers work
better. We are a single source for everything customers need to be more
productive, including the latest technology, core office supplies, print
and document services, business services, facilities products,
furniture, and school essentials.
The company has combined annual sales of approximately $17 billion,
employs about 66,000 associates, and 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.
Office Depot, Inc.’s common stock is listed on the New York Stock
Exchange under the symbol ODP. Additional press information can be found
at: http://news.officedepot.com.
Additional information about the recently completed merger of Office
Depot and OfficeMax can be found at http://officedepotmaxmerger.com.
All trademarks, service marks and trade names of Office Depot, Inc.
and OfficeMax Incorporated used herein are trademarks or registered
trademarks of Office Depot, Inc. and OfficeMax Incorporated,
respectively. Any other product or company names mentioned herein are
the trademarks of their respective owners.
FORWARD-LOOKING STATEMENTS
This communication may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements or disclosures may discuss goals, intentions and expectations
as to future trends, plans, events, results of operations or financial
condition, or state other information relating to, among other things,
the Company, the merger and other transactions contemplated by the
merger agreement, based on current beliefs and assumptions made by, and
information currently available to, management. Forward-looking
statements generally will be accompanied by words such as “anticipate,”
“believe,” “plan,” “could,” “estimate,” “expect,” “forecast,”
“guidance,” “intend,” “may,” “possible,” “potential,” “predict,”
“project,” “propose” or other similar words, phrases or expressions, or
other variations of such words. These forward-looking statements are
subject to various risks and uncertainties, many of which are outside of
the Company’s control. There can be no assurances that the Company will
realize these expectations or that these beliefs will prove correct, and
therefore investors and shareholders should not place undue reliance on
such statements.
Factors that could cause actual results to differ materially from those
in the forward-looking statements include adverse regulatory decisions;
the risks that the combined company will not realize the estimated
accretive effects of the merger or the estimated cost savings and
synergies; the businesses of Office Depot and OfficeMax may not be
integrated successfully or such integration may take longer, be more
difficult, time-consuming or costly to accomplish than expected; the
business disruption following the merger, including adverse effects on
employee retention; the combined company’s ability to maintain its
long-term credit rating; unanticipated changes in the markets for the
combined company’s business segments; unanticipated downturns in
business relationships with customers; competitive pressures on the
combined company’s sales and pricing; increases in the cost of material,
energy and other production costs, or unexpected costs that cannot be
recouped in product pricing; the introduction of competing technologies;
unexpected technical or marketing difficulties; unexpected claims,
charges, litigation or dispute resolutions; new laws and governmental
regulations. The foregoing list of factors is not exhaustive. Investors
and shareholders should carefully consider the foregoing factors and the
other risks and uncertainties described in Office Depot’s and
OfficeMax’s Annual Reports on Form 10-K and Quarterly Reports on Form
10-Q filed with the Securities and Exchange Commission. The combined
company does not assume any obligation to update or revise any
forward-looking statements.
Source: Office Depot, Inc.
Office Depot
Brian Levine, 561-438-2895
Media Relations
Brian.Levine@officedepot.com
or
Rich
Leland, 561-438-3796
Investor Relations
Richard.Leland@officedepot.com
or
Office
Max
Julie Treon, 630-864-6155
Media Relations
julietreon@officemax.com
or
Mike
Steele, 630-864-6826
Investor Relations
michaelsteele@officemax.com
