Office Depot Inc. and OfficeMax Inc. confirmed Wednesday that they're planning to merge, but left some key questions about the deal unanswered.
The all-stock deal calls for Office Depot to issue 2.69 new shares of common stock for each outstanding common share of OfficeMax. But officials declined to say where the newly merged company would be headquartered, who would sit in the CEO seat, or even what it would called.
OfficeMax CEO Ravi Saligram and Office Depot's chief Neil Austrian presented a united front on a Wednesday conference call with analysts, taking turns to explain the specifics of the deal.
"It takes two to tango," Saligram said. "Lo and behold, Neil and I have decided to tango."
The announcement of a merger, which Saligram said would "create a stronger, more global, more efficient competitor," put to rest years of speculation about a deal. The merger would unite the No. 2 company in the stationery and office supplies industry, Florida-based Office Depot, with the No. 3 company, Naperville, Ill.-based OfficeMax.
A merger between two chains "has made sense for years," Credit Suisse analyst Gary Balter wrote in a note this week.
OfficeMax, with roughly 29,000 employees, operates about 900 stores. Office Depot has about 38,000 employees and operates about 1,600 stores.
The two CEOs wouldn't say how many stores would be closed, but Balter predicted about 600.
If the merger is completed, Office Depot's board will have an equal number of directors chosen by that company and OfficeMax. Based on Wednesday's closing price, the deal is valued at about $976 million.
The combined company would have $18 billion in combined sales, and achieve $400 million to $600 million in savings over three years, according to company officials.