SOURCE: Research Driven Investing

Research Driven Investing

February 22, 2013 08:20 ET

Office Depot and OfficeMax Surge Ahead on Merger Talks

RDInvesting Provides Stock Research on Office Depot and OfficeMax

NEW YORK, NY--(Marketwire - Feb 22, 2013) - Shares of office retailers Office Max and Office Depot were sent soaring Tuesday after The Wall Street Journal on Monday reported that the companies were in "advanced talks to merge." The proposed merger would help the companies compete against rivals Staples Inc. and Research Driven Investing examines investing opportunities in the Retail Industry and provides equity research on Office Depot Inc. (NYSE: ODP) and OfficeMax Inc. (NYSE: OMX).

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According the WSJ article the merger is expected to be a "stock-for-stock" exchange, but further details are unknown at this time. The current market values of Office Depot and Office Max are approximately $1.3 billion and $933 million, respectively. The two companies combined would have roughly 2575 stores located across the U.S. and Mexico. In 1997, a potential deal between Staples and Office Depot was blocked by the U.S. Federal Trade Commission as they feared it would lower completion and increase prices.

"Consolidation would address the office supply sector's disadvantaged industry structure," Sanford C. Bernstein retail analyst Colin McGranahan wrote in a research note on Friday.

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Office Depot has annual sales of approximately $11.5 billion, employs about 39,000 associates, and serves customers in 60 countries around the world. The company is scheduled to release results for the fourth quarter and full year 2012 on Tuesday, February 26th. For the third quarter of 2012 the company had sales of approximately $2.7 billion.

OfficeMax consumers and business customers are served by approximately 29,000 associates through; and; more than 900 stores in the U.S. and Mexico; and direct sales and catalogs. The company released results for the fourth quarter and full year 2012 on Thursday, February 21st. Shares of Office surged over 20 percent on large volume Tuesday.

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