Activist Vora and Office Depot Sign Revised Agreement: Changes to Board Composition, Ownership Requirements, and Agreement Term

Fintel reports that HG Vora Capital Management, LLC has filed a 13D/A form with the SEC disclosing ownership of 5,000,000 shares of Office Depot, Inc. (ODP). This represents 10.9% of the company.

On Dec. 27, 2022, Vora and the company entered into a Revised Agreement, which makes the following changes to the terms of their previous agreement:

  • Extends the term of the agreement to either Dec. 31, 2023, or 14 days before the first date on which shareholders are permitted to submit director nominations for the 2024 annual meeting of the company, whichever comes first.
  • Requires the Board to nominate the HG Vora Designee for election as a company director at the 2023 Annual Meeting unless Vora and any affiliates no longer meet the Company Ownership Level Minimum or Vora has breached the agreement and failed to cure the breach within five business days.
  • Grants Vora the right to designate a substitute person to fill any vacant board positions during the term of the agreement, as long as Vora and any affiliates still own at least 9.9% of the company’s outstanding common stock and Vora has not breached the agreement and failed to cure the breach within five business days. This substitute person must meet specific qualifications.
  • Prohibits any increase in the size of the Board beyond nine directors during the term of the agreement unless certain conditions are met.
  • Requires the HG Vora Designee to offer to resign from the Board on Dec. 31, 2023, or earlier if certain conditions are met.

The ODP Corporation is a leading provider of business services and supplies, products and digital workplace technology solutions to small, medium and enterprise businesses through an integrated business-to-business (B2B) distribution platform, which includes world-class supply chain and distribution operations, dedicated sales professionals and technicians, online presence, and approximately 1,200 stores. Through its banner brands Office Depot®, OfficeMax, CompuCom® and Grand & ®, as well as others, the company offers its customers the tools and resources they need to focus on their passion for starting, growing and running their business.

What are other large shareholders doing?

Lsv Asset Management holds 1,987,690 shares representing 4.34% ownership of the company. In its prior filing, the firm reported owning 1,899,977 shares, representing an increase of 4.41%. The firm increased its portfolio allocation in ODP by 32.13% over the last quarter.

Greenlight Capital Inc holds 1,692,760 shares representing 3.70% ownership of the company. No change in the last quarter.

Neuberger Berman Group LLC holds 1,269,628 shares representing 2.77% ownership of the company. In its prior filing, the firm reported owning 1,182,454 shares, representing an increase of 6.87%. The firm decreased its portfolio allocation in ODP by 33.76% over the last quarter.

Hotchkis & Wiley Capital Management Llc holds 1,150,108 shares representing 2.51% ownership of the company. In its prior filing, the firm reported owning 1,401,015 shares, representing a decrease of 21.82%. The firm increased its portfolio allocation in ODP by 3.04% over the last quarter.

What is the overall Fund Sentiment?

There are 509 funds or institutions reporting positions in Office Depot, Inc. This is an increase of 2 owner(s) or 0.39%.

Average portfolio weight of all funds dedicated to Office Depot, Inc. is 0.2332%, a decrease of 3.4753%. Total shares owned by institutions decreased in the last three months by 0.30% to 50,876,459 shares.

Fintel’s Fund Sentiment Score is a quantitative model that ranks companies from zero to 100 based on Fund Sentiment. Fund Sentiment is important because it tells you if funds are buying or selling – particularly, how the company ranks compared to other companies in the investing universe.

Click to see the Fintel Fund Sentiment Score for ODP / Office Depot, Inc.

This article originally appeared on Fintel

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