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01/14/2022

Office Depot parent delays spin-off after getting new offer for consumer business

Marianne Wilson
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Office Depot parent company ODP Corp. has delayed plans to split the company.

Staples has a rival in years-long pursuit to acquire rival Office Depot.

The ODP Corp said it is delaying its previously announced plans to split into two public companies to give it time to review offers for the potential sale of its consumer business, which includes approximately 1,100 Office Depot and OfficeMax stores, officedepot.com, and the Office Depot and OfficeMax intellectual property, including all brand names. The delay comes after ODP, in May, approved a plan for a tax-free spinoff that would separate the company into two publicly traded companies.  

In November, USR Parent Inc, the parent of Staples and a portfolio company of private equity firm Sycamore Partners, reaffirmed its earlier proposal to acquire ODP’s consumer business for $1.0 billion in cash. (The offer represented Staples’ third attempt to buy its rival. In 2016, Staples and Office Depot called off their merger after a federal judge issued an injunction temporarily blocking the deal over antitrust concerns. Staples previously tried to acquire Office Depot in 1996.)

In December, ODP received another bid from a third party. ODP declined to specify the name of the company or the size of the offer.

The company said it is still in talks with Sycamore as it further evaluates “the potential value and regulatory risk of Sycamore's proposed transaction.”

"We look forward to further evaluating the potential sale of ODP's consumer business to determine whether a sale may provide greater value for our shareholders than a public company separation," CEO Gerry Smith said. "If the consumer business is not sold, then ODP's Board of Directors will reevaluate the advisability and timing of the public company separation."

[Read More: Parent of Office Depot names CEOs for spin-off companies]