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
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.
Office DepotBrian Levine, 561-438-2895Media
RelationsBrian.Levine@officedepot.comorRich Leland,
561-438-3796Investor
RelationsRichard.Leland@officedepot.comorOffice MaxJulie
Treon, 630-864-6155Media Relationsjulietreon@officemax.comorMike
Steele, 630-864-6826Investor
Relationsmichaelsteele@officemax.com
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