The two office supply companies will come together to challenge industry leader Staples, Inc.
Office Depot Inc. said Wednesday it agreed to buy OfficeMax in an all-stock deal that would transform office supply retail sector.
That's equal to about $13.50 per share, based on Office Depot's $5.02 per share closing price Tuesday, giving the deal a total value of about $1.2 billion. OfficeMax had about 86.7 million shares outstanding as of Oct. 26, according to SEC filings.
Office Depot posted the news in its earnings release on its Web site on Wednesday morning, but the release later seemed to be taken down from the site. Office Depot and OfficeMax did not respond to requests for an explanation.
The move would combine the No. 2 and No. 3 office supply retailer and lead to consolidation in an industry that analysts have said for years is overstored. It reflects the changing retail landscape as "big box" stores become outmoded and more people shop online.
Office Depot and OfficeMax, along with bigger rival Staples Inc., were all founded in the mid- to late 1980s and helped pioneer the big-box boom in the 1990s, expanding rapidly in the U.S.
But the rise of Web retailers like Amazon.com and more expansion into office supply categories by discounters like Costco and Wal-Mart has been tough on the sector. In addition, office suppliers were slow to bounce back from the recession, as consumers and small businesses alike cut back on ordering office products.
The companies have closed stores, slashed costs and streamlined operations to offset stagnant sales. Rumors about possible consolidation have swirled around the sector for years but nothing ever materialized.