Following an inadvertent announcement earlier this morning of a merger between office supply retailers Office Depot Inc. (NYSE: ODP) and OfficeMax Inc. (NYSE: OMX), the two companies have now made it official. As the withdrawn press release indicated, OfficeMax shareholders will receive 2.69 shares of Office Depot stock in exchange for each share of OfficeMax. The deal values OfficeMax at about $1.2 billion.
The merger of equals is expected to close by the end of this calendar year. Following the closing, the combined company will choose a name, brands and location for the new company’s headquarters. The combined company will create a new board of directors with equal representation from each company and will initiate a search for a permanent chief executive. Until a new CEO is appointed, the current CEOs of both companies will continue in their current positions.
This all sounds a bit like a shotgun marriage. Shouldn’t the two companies have ironed out some of these details before asking shareholders to vote on the merger? It sounds like the two sides have not agreed on very much except that they cannot survive separately, so they will try getting married to see how that works out. What a great way to start to a new relationship.
Shares of OfficeMax are up 5% at $13.65, after posting a new 52-week high of $14.92 earlier. The prior range was $4.10 to $14.08. Office Depot shares are down about 5% at $4.76, in a 52-week range of $1.51 to $6.10. Perhaps OfficeMax shareholders are hoping that Staples Inc. (NASDAQ: SPLS) will renew its 1997 attempt to merge the two companies. Hope springs eternal.