Announces It Has Received a Proposal from a
Second Party to Acquire Its Consumer Business
The ODP Corporation (“ODP” or the “Company”) (NASDAQ:ODP), a
leading provider of business services, products and digital
workplace technology solutions through an integrated B2B
distribution platform, today announced that its Board of Directors
determined to delay the previously announced public company
separation to evaluate a potential sale of the Company’s consumer
business.
In May 2021, the Company announced that its Board of Directors
unanimously approved a plan to separate ODP into two independent,
publicly-traded companies by means of a tax-free spin-off to ODP
shareholders. In November 2021, USR Parent, Inc., the parent
company of Staples and a portfolio company of Sycamore Partners,
reaffirmed its non-binding proposal to acquire the Company’s
consumer business, including the Office Depot and OfficeMax retail
stores business, the Company's direct channel business
(officedepot.com), and the Office Depot and OfficeMax intellectual
property, including all brand names, for $1 billion in cash. The
Company remains in conversation with Sycamore as it further
evaluates the potential value and regulatory risk of Sycamore’s
proposed transaction.
In December 2021, ODP’s Board of Directors received a
non-binding proposal from another third party to acquire the
Company’s consumer business. The terms of that proposal are
confidential.
The Company’s Board of Directors is carefully reviewing both
proposals with the assistance of its financial and legal advisors
to determine the course of action that it believes is in the best
interests of the Company and its shareholders. While the Company
has previously been focusing on completing the public company
separation during the first half of 2022, it has determined to
delay further work on the separation in order to avoid incurring
potentially unnecessary separation costs while it focuses on a
potential sale of the consumer business. There can be no assurance
that a sale of the consumer business will take place and, if it
were to take place, as to the terms of such a sale.
“We look forward to further evaluating the potential sale of
ODP’s consumer business to determine whether a sale may provide
greater value for our shareholders than a public company
separation,” said Gerry Smith, chief executive officer of The ODP
Corporation. “If the consumer business is not sold, then ODP’s
Board of Directors will reevaluate the advisability and timing of
the public company separation.”
The ODP Corporation’s previous holding company reorganization
provided it with the flexibility to simplify its legal structure
and more closely align its operating assets to their respective
operating channels. The Company has mostly completed that
realignment, resulting in the following operating businesses owned
under The ODP Corporation holding company structure:
ODP Business Solutions, LLC – a leading B2B solutions
provider serving small, medium and enterprise level companies,
including the contract sales channel of ODP’s prior Office Depot
Business Solutions Division.
Office Depot, LLC – a leading provider of retail consumer
and small business products and services distributed via
approximately 1,100 Office Depot and OfficeMax retail locations and
an award-winning eCommerce presence, officedepot.com.
Varis, LLC – ODP’s B2B digital platform technology
business focused on transforming digital commerce between buying
organizations and suppliers (govaris.com).
Federation Entities – More than a dozen regional office
supply distribution businesses acquired by ODP as part of its
transformation to expand its reach and distribution network into
geographic areas that were previously underserved. These businesses
are wholly owned by ODP but continue to operate under their own
brand names.
Veyer, LLC – ODP’s world-class supply chain,
distribution, procurement and global sourcing operations.
The operating businesses will each pursue their unique market
opportunities and growth strategies, with separate management
dedicated to improving the value for shareholders and
stakeholders.
Simpson Thacher & Bartlett LLP and Goldman Sachs & Co.
LLC are acting as legal and financial advisors to the Company,
respectively.
About The ODP Corporation The ODP Corporation
(NASDAQ:ODP) 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 1,100 stores. Through its banner brands Office
Depot®, OfficeMax®, ODP Business Solutions™, Varis™ and
Grand&Toy®, as well as others, the company offers its customers
the tools and resources they need to focus on their passion of
starting, growing and running their business. For more information,
visit news.theodpcorp.com and investor.theodpcorp.com.
ODP, ODP Business Solutions, Office Depot and Veyer are
trademarks of The Office Club, Inc. OfficeMax is a trademark of
OMX, Inc. Varis is a trademark of Varis, LLC. Grand&Toy is a
trademark of Grand & Toy, LLC in Canada. ©2022 Office Depot,
LLC. All rights reserved. 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, cash flow or financial condition, the potential impacts
on our business due to the unknown severity and duration of the
COVID-19 pandemic, or state other information relating to, among
other things, the Company, 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,” “outlook,” “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 stakeholders 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, among other
things, highly competitive office products market and failure to
differentiate the Company from other office supply resellers or
respond to decline in general office supplies sales or to shifting
consumer demands; competitive pressures on the Company’s sales and
pricing; the adverse effects of an unsolicited tender offer on our
business, operating results or financial condition; the risk that
the Company is unable to transform the business into a
service-driven, B2B platform that such a strategy will not result
in the benefits anticipated; the risk that the Company will not be
able to achieve its strategic plans, including the proposed
separation of its consumer business, and the high costs in
connection with these transactions may not be recouped if these
transactions are not consummated; the risk that the Company may not
be able to realize the anticipated benefits of acquisitions due to
unforeseen liabilities, future capital expenditures, expenses,
indebtedness and the unanticipated loss of key customers or the
inability to achieve expected revenues, synergies, cost savings or
financial performance; the risk that the Company is unable to
successfully maintain a relevant omni-channel experience for its
customers; the risk that the Company is unable to execute the
Maximize B2B Restructuring Plan successfully or that such plan will
not result in the benefits anticipated; failure to effectively
manage the Company’s real estate portfolio; loss of business with
government entities, purchasing consortiums, and sole- or limited-
source distribution arrangements; failure to attract and retain
qualified personnel, including employees in stores, service
centers, distribution centers, field and corporate offices and
executive management, and the inability to keep supply of skills
and resources in balance with customer demand; failure to execute
effective advertising efforts and maintain the Company’s reputation
and brand at a high level; disruptions in computer systems,
including delivery of technology services; breach of information
technology systems affecting reputation, business partner and
customer relationships and operations and resulting in high costs
and lost revenue; unanticipated downturns in business relationships
with customers or terms with the suppliers, third-party vendors and
business partners; disruption of global sourcing activities,
evolving foreign trade policy (including tariffs imposed on certain
foreign made goods); exclusive Office Depot branded products are
subject to additional product, supply chain and legal risks;
product safety and quality concerns of manufacturers’ branded
products and services and Office Depot private branded products;
covenants in the credit facility; general disruption in the credit
markets; incurrence of significant impairment charges; retained
responsibility for liabilities of acquired companies; fluctuation
in quarterly operating results due to seasonality of the Company’s
business; changes in tax laws in jurisdictions where the Company
operates; increases in wage and benefit costs and changes in labor
regulations; changes in the regulatory environment, legal
compliance risks and violations of the U.S. Foreign Corrupt
Practices Act and other worldwide anti-bribery laws; volatility in
the Company’s common stock price; changes in or the elimination of
the payment of cash dividends on Company common stock;
macroeconomic conditions such as future declines in business or
consumer spending; increases in fuel and other commodity prices and
the cost of material, energy and other production costs, or
unexpected costs that cannot be recouped in product pricing;
unexpected claims, charges, litigation, dispute resolutions or
settlement expenses; catastrophic events, including the impact of
weather events on the Company’s business; the discouragement of
lawsuits by shareholders against the Company and its directors and
officers as a result of the exclusive forum selection of the Court
of Chancery, the federal district court for the District of
Delaware or other Delaware state courts by the Company as the sole
and exclusive forum for such lawsuits; and the impact of the
COVID-19 pandemic on the Company’s business, including on the
demand for its and our customers’ products and services, on trade
and transport restrictions and generally on our ability to
effectively manage the impacts of the COVID-19 pandemic on our
business operations. 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 the Company’s Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, and Current Reports on Form 8-K filed with
the U.S. Securities and Exchange Commission. The Company does not
assume any obligation to update or revise any forward-looking
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220114005103/en/
Tim Perrott
Investor Relations
561-438-4629 Tim.Perrott@officedepot.com
Danny Jovic
Media Relations
561-438-1594 Danny.Jovic@officedepot.com
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