Following Review of Alternatives, Board
Unanimously Determines to Maintain B2B and B2C Businesses Under
Common Ownership
Company Continues Strong Operating Performance
and Issues Preliminary Second Quarter 2022 Guidance
The ODP Corporation (NASDAQ:ODP) (“ODP” or the “Company”), 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
completed its previously announced review of the public and private
non-binding proposals received by the Company to acquire its
consumer business, including the Office Depot and OfficeMax retail
stores business and its direct channel business,
officedepot.com.
Following the completion of that review, the Board of Directors
unanimously determined it is in the best interests of the Company
and its shareholders not to divest the consumer business at this
time. In reaching its conclusion, the Board was assisted by its
financial and legal advisors, and its process included further
discussions of the non-binding proposals with the potential buyers
to ascertain additional details about the proposed terms and
conditions. It also consisted of evaluating the expected value to
the Company of such proposals, taking into account the proposed
structure, economic terms, certainty, expected timing and potential
regulatory requirements.
Further, due to current market conditions, the Board also
determined not to resume the Company’s previously announced
potential public company separation at this time and instead to
maintain all of its businesses under common ownership. That
separation process had been put on hold earlier this year pending
evaluation of potential opportunities to divest the Company’s
consumer business.
“Given current market and macroeconomic conditions, as well as
the benefits of maintaining purchasing and supply chain synergies,
the Board has determined that now is not the right time to further
pursue separating the Company into two independent, publicly traded
companies,” said Joseph Vassalluzzo, chair of the Board of
Directors of The ODP Corporation. “However, the completion of our
internal reorganization will make such a potential separation
substantially simpler should the Company determine to resume the
separation process following a change of market conditions in the
future.”
The ODP Corporation recently completed transforming its
operations under its holding company structure into its B2C
business and three distinct B2B business and digital segments
focused on further enhancing value for shareholders:
- Office Depot, LLC – a leading provider of retail
consumer and small business products and services distributed via
approximately 1,000 Office Depot and OfficeMax retail locations and
an award-winning eCommerce presence (officedepot.com).
- ODP Business Solutions, LLC – ODP’s leading B2B
solutions provider serving small, medium and enterprise level
companies (odpbusiness.com). This includes the contract sales
channel of ODP’s prior Office Depot Business Solutions Division;
Grand & Toy, operating one of the biggest distribution networks
serving customers in Canada coast-to-coast via its direct sales
force and best in class e-commerce platform (grandandtoy.com); and
the Company’s Federation Entities, which comprise 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, and
which continue to operate under their own brand names.
- Veyer, LLC – a world-class supply chain, distribution,
procurement and global sourcing operation (veyerlogistics.com).
Veyer procures and distributes products for both Office Depot, LLC
and ODP Business Solutions, LLC, as well as third-party
customers.
- Varis, LLC – ODP’s B2B digital platform technology
business focused on transforming digital commerce between buying
organizations and suppliers (govaris.com).
“Completing the realignment of our operating businesses enables
our dedicated management teams to focus on meeting their respective
customers’ needs and implement channel specific go-to-market
strategies. And by the end of the year, it will also enable us to
provide greater visibility to our investors about these operating
businesses’ performance on a go-forward basis,” said Gerry Smith,
chief executive officer of The ODP Corporation. “Moreover, because
of the current scaling benefits derived from operating under The
ODP Corporation holding company structure, Office Depot, ODP
Business Solutions, Veyer and Varis are better together as a value
creating enterprise at this time.”
“Our operating flexibility and balance sheet currently have us
well positioned to continue delivering strong results against a
macroeconomic backdrop that remains challenged by inflation and
supply chain constraints,” said Anthony Scaglione, executive vice
president and chief financial officer of The ODP Corporation. “For
the second quarter of 2022, we expect consolidated revenue to be
approximately $2.0 billion and adjusted EBITDA in a range of $85 to
$90 million. We continue to expect our full-year 2022 results to be
in-line with the previous year and will provide more details
regarding our operating segment realignment and long-range outlook,
including capital allocation and returns, in the coming
months.”
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 1,000 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 and Office Depot 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,” “expectations”, “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 or sale 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20220621005423/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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