Ahead of the Bell: Office Depot, OfficeMax join
NEW YORK (AP) — Office Depot and OfficeMax Inc. have completed their $1.2 billion merger and the combined office products supplier will begin trading Wednesday under the symbol ODP on the New York Stock Exchange.
The merger, first announced in February, received clearance from the Federal Trade Commission on Friday.
The merger marks the first move toward consolidation in an industry that is bloated with stores. It reflects the changing retail landscape as "big box" stores have become outmoded and more people shop online. The companies say the combination will help them compete against larger rival Staples Inc. as well as online competitors and discount stores.
The companies said late Tuesday they will use the name Office Depot Inc. Still in question is who the new CEO will be and where the headquarters will be located. Neil Austrian, chairman and CEO of Office Depot, and Ravi Saligram, president and CEO of OfficeMax, will serve as co-CEOs, until the CEO search is completed.
The company said uncertainty surrounding the timing of the FTC approval made it difficult to complete the CEO search before the merger was done. The combined Office Depot has revenue of $17 billion, 2,200 retail stores and 66,000 employees.
Each company will maintain separate loyalty programs until 2014, when a combined program will be announced.
OfficeMax shareholders will receive 2.69 shares of Office Depot for each OfficeMax share they hold and OfficeMax will no longer trade under the OMX ticker.
Separately, Office Depot Inc., based in Boca Raton, Fla., reported third-quarter net income of $132.9 million, or 41 cents per share, compared with a loss of $69.6 million, or 25 cents per shares in the prior-year quarter. Excluding a gain related to selling a Mexican joint venture, a goodwill impairment charge related to the venture, merger costs and other one-time items, earnings came to 2 cents per share. Revenue fell 3 percent to $2.62 billion. Analysts surveyed by FactSet expected earnings of 6 cents per share on revenue of $2.6 billion.
OfficeMax Inc., based in Naperville, Ill., said third-quarter net income fell 93 percent to $30.4 million, or 34 cent per share, from $432.1 million, or $4.92 per share. Revenue fell 5 percent to $1.66 billion from $1.74 billion. Excluding one-time items, earnings totaled 15 cents per share. Analysts expected earnings of 22 cents per share on revenue of $1.68 billion.
Shares of Office Depot rose 5 cents to $4.37 in premarket trading about 45 minutes ahead of the market opening.