Two Leading Companies to Combine to Build a Stronger, More Efficient
Competitor Able to Meet the Growing Challenges of a Rapidly Changing
Industry
Customers Will Benefit from Unique and Innovative Products, Services
and Solutions Available Through a Global, Multichannel Network
Combined Company Positioned for Sustainable Long-Term Value Creation,
Including Anticipated Annual Synergies of $400-$600 Million and Improved
Cash Flows
Combined Company’s Newly Constituted Board of Directors to Include
Equal Representation from Each of the Two Companies
NAPERVILLE, Ill. & BOCA RATON, Fla.--(BUSINESS WIRE)--Feb. 20, 2013--
OfficeMax Incorporated (NYSE:OMX) and Office Depot, Inc. (NYSE:ODP)
today announced the signing of a definitive merger agreement under which
the companies would combine in an all-stock merger of equals transaction
intended to qualify as a tax-free reorganization. The transaction, which
was unanimously approved by the Board of Directors of both companies,
will create a stronger, more efficient global provider better able to
compete in the rapidly changing office solutions industry. Customers
will benefit from enhanced offerings across multiple distribution
channels and geographies. The combined company, which would have had pro
forma combined revenue for the 12 months ended December 29, 2012 of
approximately $18 billion, will also have significantly improved
financial strength and flexibility, with the ability to deliver
long-term operating performance and improvements through its increased
scale and significant synergy opportunities.
Under the terms of the agreement, OfficeMax stockholders will receive
2.69 Office Depot common shares for each share of OfficeMax common stock.
“In the past decade, with the growth of the internet, our industry has
changed dramatically. Combining our two companies will enhance our
ability to serve customers around the world, offer new opportunities for
our employees, make us a more attractive partner to our vendors, and
increase stockholder value,” said Neil Austrian, Chairman and Chief
Executive Officer of Office Depot. “Office Depot and OfficeMax share a
similar vision and culture, and will greatly benefit from drawing on the
industry’s most talented people, combining our best practices and
realizing significant savings. We are confident that this merger of
equals represents a new beginning for our two companies and will allow
us to build a more competitive enterprise for the long term.”
“We are excited to bring together two companies intent on accelerating
innovation for our customers and better differentiating us for success
in a dynamic and highly competitive global industry,” said Ravi
Saligram, President and CEO of OfficeMax. “We are confident that there
will be exciting new opportunities for employees as part of a truly
global business. Together, we will have the opportunity to build on our
strong digital platforms and to expand our multichannel capabilities to
better serve our customers and to compete more effectively. Importantly,
this merger of equals transaction will provide stockholders of both
companies with a compelling opportunity to participate in the long-term
upside potential of the combined company.”
Companies Expect Strategic Combination To
Create Long-Term Stockholder Value
Key strategic benefits of the transaction include:
-
Merger of Equals Structure: OfficeMax and Office Depot will
have equal representation and governance rights on the combined
company’s Board of Directors and equal input on key decisions. With an
all-stock merger, OfficeMax and Office Depot stockholders will benefit
proportionately from the synergies achieved as a combined company.
-
Enhanced Financial Performance: The combined company is
positioned to deliver long-term operating improvement, with greater
potential for earnings expansion and improved cash flow generation.
-
Significant Synergy Opportunities: The merger is expected to
deliver $400-$600 million in annual cost synergies by the third year
following the transaction’s close by leveraging both operating and G&A
efficiencies.
-
Financial Strength and Flexibility: On a pro forma basis as of
December 29, 2012, the combined company would have had more than $1
billion in cash on hand and more than $1 billion available through
revolving credit facilities, giving it the flexibility to invest in
both its current business and future growth opportunities.
-
Increased Scale and Competitiveness: The combined company will
be well positioned to optimize its shared multichannel sales platform
and distribution network, primarily in North America. Together, the
companies will provide a wide array of services and solutions that
enable customers to work more efficiently and productively. By
implementing best practices in sales, operations and management, the
combined company is expected to be better able to compete with the
many online retailers, warehouse clubs and other traditional retailers
that are placing a greater emphasis on office product sales.
-
Broader Global Footprint: The merger will combine the two
companies’ complementary international businesses, with minimal
overlap, strengthening the combined company’s ability to serve
customers around the world.
-
Improved Customer Experience to Build Brand Loyalty: Consumers
and business-to-business customers are increasingly demanding a
seamless omnichannel experience across retail stores, direct sales,
telesales and digital environments. By integrating these touchpoints
effectively, the combined company expects to build lasting brand
loyalty.
-
Accelerated Innovation: Both companies anticipate sharing
customer insights and learnings from innovative pilot programs
underway to better identify and fulfill evolving customer needs.
Transaction Details
Following the closing, the combined company’s newly constituted Board of
Directors will include equal representation and governance rights from
each of the two companies. The parties have also agreed to form a
selection committee made up of an equal number of independent Board
members from each company that will oversee the search process for
naming the CEO for the combined company. Both incumbent CEOs, as well as
external candidates, will be considered in the search process. Neil
Austrian, the Chairman and CEO of Office Depot, and Ravi Saligram, the
President and CEO of OfficeMax will remain in their current positions
through the completion of the search process.
The combined company’s management team is expected to draw upon the
experienced group of leaders from both companies. The combined company’s
name, marketing brands and corporate headquarters location are expected
to be determined following the appointment of the CEO for the combined
company.
The transaction is expected to close by the end of calendar year 2013,
subject to stockholder approval from both companies, the receipt of
regulatory approvals and other customary closing conditions.
Under the merger agreement, OfficeMax will have the ability to declare
and pay to its common stockholders aggregate cash dividends of up to
$131 million ($1.50 per common share) before the closing of the
transaction. Payment of dividends would not affect the exchange ratio in
the transaction.
In connection with the transaction, BC Partners, Inc. and its
affiliates, which hold preferred stock representing approximately 22
percent of Office Depot on an as-converted basis, have agreed to vote in
favor of the merger. In addition, BC Partners has agreed that as of the
closing, its remaining equity stake will consist of common shares
representing an amount no more than 5 percent of the voting capital
stock of the combined company as a result of the combination of the
redemption of preferred shares, conversion to common shares and open
market sales of such common shares and repurchases by Office Depot.
Following the closing, BC Partners will have no Board designees or other
contractual governance rights related to the combined company.
J. P. Morgan Securities LLC served as exclusive financial advisor to
OfficeMax, and provided a fairness opinion to the Board of OfficeMax,
and Skadden,
Arps, Slate, Meagher & Flom LLP and Dechert LLP acted as
legal counsel to OfficeMax.
Peter J. Solomon Company, L.P. and Morgan Stanley & Co. LLC acted as
financial advisors and provided fairness opinions to the Board of Office
Depot, and Simpson Thacher & Bartlett LLP acted as legal counsel to
Office Depot. Kirkland & Ellis acted as legal counsel to the Board of
Office Depot.
In connection with the transaction, Perella Weinberg Partners acted as
financial advisors to the Transaction Committee of Office Depot'sBoard
of Directors and Kirkland & Ellis LLP served as the Committee's legal
advisor.
Conference Call and Webcast
OfficeMax and Office Depot will host a joint webcast today at 11:00 a.m.
Eastern Time (10:00 a.m. Central Time) to discuss the proposed merger.
Participants will include Ravi Saligram, President and CEO, OfficeMax;
Bruce Besanko, EVP, Chief Financial Officer and Chief Administrative
Officer, OfficeMax; Neil Austrian, Chairman and CEO, Office Depot; and
Mike Newman, EVP and Chief Financial Officer, Office Depot.
The live audio webcast of the conference call, as well as a related
slide presentation, can be accessed at either the “Investors” section of
OfficeMax’s website at www.investor.officemax.com
or the “Investors” section of Office Depot’s website at www.officedepot.com.
The webcast and a podcast will be archived and available online on each
company’s website for at least 30 days following the call.
Fourth Quarter and Full Year 2012 Financial
Results
Office Depot and OfficeMax will each announce results for their fourth
quarter and full year 2012 this morning before the market opens. This
content can be accessed, respectively, at the “Investors” section of
Office Depot’s website at officedepot.com and on the “Quarterly
Earnings” page located within the “Investors” section of OfficeMax’s
website at investor.officemax.com.
NO OFFER OR SOLICITATION
This communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to subscribe for or buy or an
invitation to purchase or subscribe for any securities or the
solicitation of any vote or approval in any jurisdiction in connection
with the transaction or otherwise, nor shall there be any sale, issuance
or transfer of securities in any jurisdiction in contravention of
applicable law. No offer of securities shall be made except by means of
a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED
WITH THE SEC
Office Depot will file with the SEC a registration statement on Form S-4
that will include the Joint Proxy Statement of Office Depot and
OfficeMax that also constitutes a prospectus of Office Depot. Office
Depot and OfficeMax plan to mail the Joint Proxy Statement/Prospectus to
their respective shareholders in connection with the transaction.
INVESTORS AND SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED
WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT OFFICE DEPOT, OFFICEMAX, THE
TRANSACTION AND RELATED MATTERS. Investors and shareholders will be able
to obtain free copies of the Joint Proxy Statement/Prospectus and other
documents filed with the SEC by Office Depot and OfficeMax through the
website maintained by the SEC at www.sec.gov.
In addition, investors and shareholders will be able to obtain free
copies of the Joint Proxy Statement/Prospectus and other documents filed
by Office Depot with the SEC by contacting Office Depot Investor
Relations at 6600 North Military Trail, Boca Raton, FL 33496 or by
calling 561-438-3657, and will be able to obtain free copies of the
Joint Proxy Statement/Prospectus and other documents filed by OfficeMax
by contacting OfficeMax Investor Relations at 263 Shuman Blvd.,
Naperville, Illinois, 60563 or by calling 630-864-6800.
PARTICIPANTS IN THE SOLICITATION
Office Depot and OfficeMax and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies
from the respective shareholders of Office Depot and OfficeMax in
respect of the transaction described the Joint Proxy
Statement/Prospectus. Information regarding the persons who may, under
the rules of the SEC, be deemed participants in the solicitation of the
respective shareholders of Office Depot and OfficeMax in connection with
the proposed transaction, including a description of their direct or
indirect interests, by security holdings or otherwise, will be set forth
in the Joint Proxy Statement/Prospectus when it is filed with the SEC.
Information regarding Office Depot’s directors and executive officers is
contained in Office Depot’s Annual Report on Form 10-K for the year
ended December 29, 2012 and its Proxy Statement on Schedule 14A, dated
March 15, 2012, which are filed with the SEC. Information regarding
OfficeMax’s directors and executive officers is contained in OfficeMax’s
Annual Report on Form 10-K for the year ended December 31, 2011 and its
Proxy Statement on Schedule 14A, dated March 20, 2012, which are filed
with the SEC.
OFFICE DEPOT SAFE HARBOR STATEMENT
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
concerning Office Depot, the merger and other transactions contemplated
by the merger agreement, Office Depot’s long-term credit rating and its
revenues and operating earnings. 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 Office Depot, based on current beliefs of
management as well as 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” or other similar words,
phrases or expressions. These forward-looking statements are subject to
various risks and uncertainties, many of which are outside of Office
Depot’s control. 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; failure to satisfy
other closing conditions with respect to the merger; the risks that the
new businesses will not be integrated successfully or that Office Depot
will not realize estimated cost savings and synergies; Office Depot’s
ability to maintain its current long-term credit rating; unanticipated
changes in the markets for its business segments; unanticipated
downturns in business relationships with customers or their purchases
from Office Depot; competitive pressures on Office Depot’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 that affect Office Depot’s business described in its
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and other documents filed from time to time with the
SEC. Office Depot does not assume any obligation to update these
forward-looking statements.
OFFICEMAX SAFE HARBOR STATEMENT
Certain statements made in this press release and other written or oral
statements made by or on behalf of OfficeMax constitute "forward-looking
statements" within the meaning of the federal securities laws, including
statements regarding OfficeMax's future performance, as well as
management's expectations, beliefs, intentions, plans, estimates or
projections relating to the future. OfficeMax cannot guarantee that the
macroeconomy will perform within the assumptions underlying its
projected outlook; that its initiatives will be successfully executed
and produce the results underlying its expectations, due to the
uncertainties inherent in new initiatives, including customer
acceptance, unexpected expenses or challenges, or slower-than-expected
results from initiatives; or that its actual results will be consistent
with the forward-looking statements and you should not place undue
reliance on them. In addition, forward-looking statements could be
affected by the following additional factors, among others, related to
the business combination: the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement or the failure to satisfy closing conditions; the ability to
obtain regulatory approvals or third-party approvals for the transaction
and the timing and conditions for such approvals; the ability to obtain
approval of the merger by the stockholders of OfficeMax and Office
Depot; the risk that the synergies from the transaction may not be
realized or may take longer to realize than expected; disruption from
the transaction making it more difficult to maintain relationships with
customers, employees or suppliers; the ability to successfully integrate
the businesses, unexpected costs or unexpected liabilities that may
arise from the transaction, whether or not consummated; the inability to
retain key personnel; future regulatory or legislative actions that
could adversely affect OfficeMax and Office Depot; and business plans of
the customers and suppliers of OfficeMax and Office Depot. The
forward-looking statements made herein are based on current expectations
and speak only as of the date they are made. OfficeMax undertakes no
obligation to publicly update or revise any forward-looking statement,
whether as a result of future events, new information or otherwise.
Important factors regarding OfficeMax that may cause results to differ
from expectations are included in OfficeMax's Annual Report on Form 10-K
for the year ended December 31, 2011, under 1A "Risk Factors", and in
OfficeMax's other filings with the SEC.
About OfficeMax
OfficeMax Incorporated (NYSE: OMX) is a leader in integrating products,
solutions and services for the workplace, whether for business or at
home. The OfficeMax mission is simple: We provide workplace innovation
that enables our customers to work better. The company provides office
supplies and paper, in-store print and document services through
OfficeMax ImPress®, technology products and solutions, and furniture to
businesses and consumers. OfficeMax customers are served by
approximately 29,000 associates through e-commerce, more than 900
stores, direct sales and catalogs. OfficeMax has been named one of the
2012 World’s Most Ethical Companies, and is the only company in the
office supply industry to receive Ethics Inside® Certification by the
Ethisphere Institute. To find the nearest OfficeMax, call
1-877-OFFICEMAX. For more information, visit www.officemax.com.
About Office Depot
Office Depot provides office supplies and services through 1,629
worldwide retail stores, a field sales force, top-rated catalogs and
global e-commerce operations. Office Depot has annual sales of
approximately $10.7 billion, employs about 38,000 associates and serves
customers in 59 countries around the world.
Office Depot’s common stock is listed on the New York Stock Exchange
under the symbol ODP. Additional press information can be found at: http://mediarelations.officedepot.com
and http://socialpress.officedepot.com/.
All trademarks, service marks and trade names of Office Depot
Incorporated and OfficeMax Incorporated used herein are trademarks or
registered trademarks of Office Depot Incorporated and OfficeMax
Incorporated, respectively. Any other product or company names mentioned
herein are the trademarks of their respective owners.
Source: Office Depot, Inc. and OfficeMax Incorporated
Investor Relations:
OfficeMax
Mike Steele,
630-864-6826
michaelsteele@officemax.com
or
Office
Depot
Brian Turcotte, 561-438-3657
brian.turcotte@officedepot.com
or
Media
Relations:
OfficeMax
Julie Treon, 630-864-6155
julietreon@officemax.com
or
Office
Depot
Brian Levine, 561-438-2895
brian.levine@officedepot.com
