Office Depot Inc. (ODP:US) is still discussing a sale of its Mexico unit to Grupo Gigante SAB, according to a company spokesman.
Office Depot, the second-largest U.S. office-supplies chain, announced a deal on Feb. 20 to acquire OfficeMax (OMX:US) Inc. for $1.17 billion. That came five days after Gigante, which already owns 50 percent of Office Depot de Mexico, offered 8.78 billion pesos ($689 million) for the remaining stake. As part of the merger agreement, OfficeMax has to approve such a deal.
“We are discussing it with the merger partner,” Brian Levine, an Office Depot spokesman, said in an interview. If OfficeMax approves, then the Office Depot board would need to sign off on the deal, he said. He declined to offer specifics on the talks.
Bloomberg News reported on Feb. 15 that Boca Raton, Florida-based Office Depot was in talks to sell the division to Gigante. Then after announcing on Feb. 20 that it would merge with OfficeMax, Office Depot Chief Executive Officer Neil Austrian said on a conference call the same day that “at this point, we’re not doing anything” about selling the Mexico unit.
Austrian’s statement wasn’t meant to be definitive about the company’s plans for its Mexico unit, Levine said.
“It is an offer that we believe deserves consideration,” Levine said in an e-mail.
The offer from Mexico City-based Gigante expires on Feb. 28, Office Depot said in a filing on Feb. 22.
Office Depot fell 6.7 percent to $3.93 at the New York close. The shares (ODP:US) have risen 20 percent this year. Gigante was unchanged at 27 pesos in Mexico City trading and has increased 10 percent this year.
Office Depot entered the joint venture in 1994, and the business has since expanded to more than 240 stores in seven countries, according to regulatory filings. Last year, the venture generated $1.1 billion in revenue, and Office Depot’s share of earnings amounted to about $32 million.
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