Not So Easy Route for the Office Depot-OfficeMax Merger
The world has changed a lot since 1997, the year the Federal Trade Commission blocked a merger between Staples (NASDAQ:SPLS) and Office Depot (NYSE:ODP) over concerns about how the deal would affect competition in the office supply sector. Today, Bill Clinton is no longer in the White House (though some may wish he still was), Staples is the top office supply retailer, and the biggest threat to the office supply industry comes from digital and online.
Now, Office Depot is seeking a merger with OfficeMax Inc. (NYSE:OMX), and again, competition and costs are at the heart of the matter. Florida’s Sun Sentinel reported that Office Depot CEO Neil Austrian said questions raised by the FTC during merger discussions have pertained to pricing. Office Depot and OfficeMax, the No. 2 and No. 3 office supply retail chains in the country, respectively, are trying to prove that a merger is a logical way to increase competition with Staples.
Signs of the merger look favorable, and stocks for the companies rallied last week when the deal appeared to be gaining speed, according to MarketWatch. But sales for both companies trail drastically behind office supply giant Staples. If the merger is approved, Staples would still out-earn the combined efforts of the two, raking in $25 billion compared to $18 billion for Office Depot and OfficeMax combined.