Office Depot and OfficeMax made it official Wednesday morning, announcing a $1.2 billion all-stock merger to create a company with a combined $18 billion in sales.
The news came after the deal was prematurely announced earlier Wednesday, buried in an Office Depot press release. DealBook reported that release jumped the gun, as bankers and lawyers were still finalizing the merger details.
Those details — 2.69 shares of Office Depot for each share of OfficeMax — were unchanged in the final announcement. At Tuesday’s closing prices the deal is worth $13.50 per share for OfficeMax, or just under $1.2 billion. That is a 25.6% to its closing price Friday, the last session before word of the impending dela broke.
Office Depot shares fell 1.8% to $4.93 Wednesday, while OfficeMax rallied 9.5% to $14.23.
Unlike many other deals of recent vintage, the leaders of the two office chains are not necessarily joining forces to run the combined business. The newly constituted board, which will include equal representation from each side, is set to conduct a search process for a new CEO. Office Depot chief Neil Austrian and his OfficeMax counterpart Ravi Saligram will be considered, along with external candidates.
BC Partners, which has preferred shares equal to a 22% stake in Office Depot, has agreed to support the merger, the companies announced.
Shares of rival Staples, which had its bid to buy Office Depot blocked by regulators in 1997, were down 2.3% to $14.31 Wednesday. Citi analyst Kate McShane upgraded the stock to neutral on the belief that it would benefit from store closures stemming from the Office Depot/OfficeMax tie-up, but warned that hopes for a Staples leveraged buyout are likely farfetched “based on the size of the deal, the secular challenges facing the company and a questionable exit strategy,” in a business that has been disrupted by online competition from the likes of Amazon.com and others.