SOURCE: Research Driven Investing
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 Amazon.com. Research Driven Investing examines investing opportunities in the Retail Industry and provides equity research on Staples, Inc. (NASDAQ: SPLS) and Amazon.com, Inc. (NASDAQ: AMZN).
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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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Staples is the world's largest office products company and second largest internet retailer. Investment firm Janney Capital Markets believes the merger would provide a major boost for Staples as it would "gain market share from store closures, a multi-year restructuring and a company overwhelmed by integration initiatives."
Amazon.com is the world's largest e-commerce company offering millions of unique new, refurbished and used items in a variety of categories. The company reported net sales grew to $21.27 billion in the fourth quarter, an increase of 22 percent when compared with sales of $260 million in fourth quarter 2011. Shares of Amazon have gained over 7 percent year-to-date.
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