Office Depot-Office Max merger gets FTC approval

| Nov 14, 2013 | Business Formation & Planning

Business owners in Worcester may be interested in the progress of a merger between Office Depot and Office Max. The companies are the second and third largest office-supply chains in the country, and they hope the merger will help them better challenge Staples and online retailers. Office Depot will buy Office Max in the merger.

A U.S. Federal Trade Commission recently concluded a seven-month antitrust investigation into the merger, concluding that competition from online retailers, Staples and retailers such as Wal-Mart ensured the market would stay competitive. The new company will have a combined revenue of around $18 billion in comparison with $24 billion from its largest rival, Staples.

The companies said they believed that the merger may save them $600 million in total costs. This figure doesn’t take into account the potential for closing stores. The company may close 500 stores by 2016. Figures representing the potential fiscal savings associated with these closures will be unavailable until FTC approval is obtained and further details are finalized. Both Staples and the newly formed Office Max-Office Depot are looking for innovative ways to address decreasing demand for printers, paper and pens in light of emerging digital technologies. According to one analyst, the merger was necessary because without it, either Office Max or Office Depot would have disappeared within a few years anyway.

Many business owners may never have to deal with a large merger or acquisition like the one between Office Depot and Office Max. Nevertheless, a business owner should be prepared when an opportunity to buy a competing business or sell out to a competitor materializes. An attorney could help someone considering a merger or other type of business reorganization by ensuring the business owner thoroughly understands his or her options. A proper understanding of the benefits, drawbacks and consequences of a transaction permits a business owner to make an informed, profitable decision for his or her business.

Source: Reuters , “Office Depot Merger With OfficeMax Wins U.S. Approval“, David McLaughlin & Matt Townsend, November 01, 2013