Is the OfficeMax-Office Depot Merger One of Equals?

With confusion surrounding the OfficeMax-Office Depot merger announcement, executives from both office supply companies went to great lengths to make the details and significance of the deal clear during their merger conference call on Wednesday.

For many consumers, the merger has an obvious benefit: now, there will no longer be a reason to confuse the two similarly named businesses. But more importantly, the integration of OfficeMax (NYSE:OMX) with Office Depot (NYSE:ODP) will create a stronger front from which the officer supplier can combat its rivals, namely Amazon (NASDAQ:AMZN), with its overly favorable pricing, and Staples (NASDAQ:SPLS), with its hefty 29 percent share of the office supply market.

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The primary motivation of the call seemed to be to give company executives a platform to describe the deal, in painful detail, as a merger of equals, in case any observers erroneously thought that Office Depot was buying OfficeMax. But one detail of their agreement makes such a claim suspect. Under the terms, OfficeMax shareholders will get a premium of 25 percent to the stock’s closing price last week, meaning that holders of OfficeMax shares will receive 2.69 shares of Office Depot for every share that they own in OfficeMax, a move that more clearly puts value on OfficeMax’s shares. On Friday, February 15 shares of OfficeMax closed at $10.75, while its counterpart ended the week at $4.59 per share. In a true merger of equals, neither company would get a premium…

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