Office Depot buys OfficeMax, Deal Worth $1.17 Billion

Office Depot Inc. has announced Wednesday it plans on acquiring Office Max Inc. in a stock transfer deal worth $1.17 billion.

Office Depot (ODP) will issue 2.69 new shares of stock for each of the 86.7 million outstanding shares of OfficeMax, the Chicago Tribune reports, completing a merger that has been rumored for years.

The move will help both companies save hundreds of millions of dollars by closing stores, lowering advertising expenses, and streamlining their supply chains, reports say. For Office Depot the acquisition is a move to help the company compete against Staples which acquired Dutch company Corporation Express in 2008.

At 39 percent of market share, Staples dominates the office supply sector which has been seeing more competition from Walmart and Amazon. Office Depot has a 19.2 percent market share and OfficeMax 15.7 percent, according to Euromonitor International

The deal comes at a turbulent time for companies in the office supply sector as the economic downturn has forced businesses to implement extensive cost cutting measures. The dropping number of supply sales indicate businesses are making a cost efficient transition toward conducting more business on the internet.

The market slump showed in Office Depot's fourth-quarter earnings report. The company reported a net loss and saw a 6 percent decrease in sales at its North American stores and a revenue decrease at units serving North American businesses.

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