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06/22/2022

Office Depot parent company reaches decision on sale, split

Dan Berthiaume
Senior Editor, Technology
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Office Depot will not have a new owner.

The ODP Corp. has reviewed the alternatives and set a firm course for its consumer business.

The parent company of the Office Depot and OfficeMax banners has ended more than a year of speculation by announcing that its board of directors has decided not to divest its consumer business at this time. The board’s decision was unanimous.

In January 2022, ODP said it was delaying its plans to split into two public companies, initially made public in May 2021, in order to give it time to review offers for the potential sale of its consumer business, which includes Office Depot and OfficeMax stores, officedepot.com, and the Office Depot and OfficeMax intellectual property, including all brand names. In its May company earnings call, ODP said the review would be completed in the “near term.”

In reaching its conclusion to hang onto the consumer business, the ODP board was assisted by its financial and legal advisors, and its process included further discussions of the non-binding proposals with the potential buyers to obtain additional details about the proposed terms and conditions. It also consisted of evaluating the expected value to the company of the proposals; taking into account factors including the proposed structure, economic terms, certainty, expected timing, and potential regulatory requirements.

Furthermore, due to current market conditions, the board said it also determined not to resume ODP’s previously announced potential separation into different public companies at this time, and instead to maintain all of its businesses under common ownership. That separation process had been put on hold earlier this year pending evaluation of potential opportunities to divest the company’s consumer business.

“Given current market and macroeconomic conditions, as well as the benefits of maintaining purchasing and supply chain synergies, the board has determined that now is not the right time to further pursue separating the Company into two independent, publicly traded companies,” said Joseph Vassalluzzo, chair of the board of directors of The ODP Corporation. “However, the completion of our internal reorganization will make such a potential separation substantially simpler should the Company determine to resume the separation process following a change of market conditions in the future.”

ODP Corporation recently completed transforming its operations under its holding company structure into its business-to-consumer business and three distinct business-to-business and digital segments:

  • Office Depot LLC – A provider of retail consumer and small business products and services distributed via approximately 1,000 Office Depot and OfficeMax retail locations and the officedepot.com e-commerce site.
  • ODP Business Solutions LLC – A business-to-business solutions provider including the contract sales channel of ODP’s prior Office Depot Business Solutions Division; Grand & Toy; and the company’s Federation Entities, which comprise more than a dozen regional office supply distribution businesses acquired by ODP which continue to operate under their own brand names.
  • Veyer LLC – A supply chain, distribution, procurement and global sourcing operation that procures and distributes products for both Office Depot LLC and ODP Business Solutions LLC, as well as third-party customers.
  • Varis LLC – A business-to-business digital platform technology provider focused on transforming digital commerce between buying organizations and suppliers.

ODP also released some updated second-quarter guidance. The company expects consolidated revenue to be approximately $2 billion and adjusted EBITDA in a range of $85 to $90 million. It continues to expect full-year 2022 results to be in-line with the previous year.

The ODP Corporation operates approximately 1,000 retail stores.