Dive Brief:
- ODP Corp. moved to delay plans to spin off its consumer business, which includes the Office Depot and OfficeMax retail banners.
- The delay will give the company’s board time to contemplate a $1 billion acquisition offer for the consumer unit from rival Staples, owned by private equity firm Sycamore Partners, as well as another offer made in December by an unnamed party.
- The decision follows months of pursuit by Staples and public demurring by ODP, which, after receiving an offer from Staples in early 2021, announced plans to break itself up. ODP previously signaled the separation would be complete in the first half of 2022.
Dive Insight:
Staples has courted Office Depot for the past year. The former rebuffed the latter, but Staples never gave up.
Months of relative quiet passed as ODP publicly went about the business of breaking itself into two companies — one focused on retail, the other on business-to-business office supplies services.
Then, in November, Staples issued a press release stating the company was still interested in acquiring ODP’s consumer business for $1 billion in cash. To anyone not privy to the boardroom discussions of both companies, the press release might have had the ring of a non sequitur to it.
Staples said in November that the company was “confident that the parties will be able to expeditiously obtain the necessary antitrust approvals” for buying the consumer business — which had been one of the sticking points for ODP. An acquisition by Staples would leave just one big-box office supplies chain store in the country after Office Depot acquired OfficeMax in 2013.
December was a busy month for ODP. The company sold its CompuCom IT business — for less than a third of what it paid for it in 2017. It also, according to this week’s press release, received another offer for its consumer business from a buyer that, for now, remains confidential.
“The Company’s Board of Directors is carefully reviewing both proposals with the assistance of its financial and legal advisors to determine the course of action that it believes is in the best interests of the Company and its shareholders,” ODP said in announcing the delay of its spin-off plans. “While the Company has previously been focusing on completing the public company separation during the first half of 2022, it has determined to delay further work on the separation in order to avoid incurring potentially unnecessary separation costs while it focuses on a potential sale of the consumer business.”
As for the Sycamore offer, ODP said that it “remains in conversation with Sycamore as it further evaluates the potential value and regulatory risk of Sycamore’s proposed transaction.”
ODP CEO Gerry Smith said in the release that if the company doesn’t ultimately sell its consumer business, the board will “reevaluate the advisability and timing of the public company separation.”
