In February 2013, Office Depot Inc. and OfficeMax Inc. announced plans to combine in a proposed $1.17 billion transaction. The merger of the two office supply chains with locations in Virginia and nationwide recently received approval from U.S. Federal Trade Commission regulators who found that the popularity of online retailers ensured competition in the office supply market.
The FTC had rejected a proposed purchase by Staples Inc. of Office Depot in 1997 on the grounds that the acquisition would be anti-competitive. However, it found that the market today has changed significantly since then. Staples is the leading office supply retailer in the country with $24 billion in sales every year. The combination of Office Depot and Office Max will create a company with $18 billion in sales.
The chief executive officer of Office Depot said that the merger will provide a new start to both companies and create a company that is stronger and more efficient. The move will give the companies more power when dealing with vendors and allow them to close stores that are under preforming. The merger is expected to save the new company $600 million in costs, not including any stores that may be closed as a result of the the transaction.
Mergers and acquisitions of any size can be complicated transactions. Certain types of combinations may present antitrust concerns that may require regulatory review, while others may be subject to federal and state corporate and securities laws. An attorney with experience in business transactions may be able to review a company's proposed expansion plans and help satisfy all applicable compliance requirements.
Source: Bloomberg, "Office Depot Merger With OfficeMax Wins U.S. Approval", David McLaughlin & Matt Townsend, November 01, 2013