OfficeMax Inc (NYSE:OMX) touts itself as a supplier of products to businesses and retail consumers. In addition to office supplies, it differentiates itself through the offering of office furniture to a wide range of office-based customers.
Office Depot Inc (NYSE:ODP) operates across three segments: North American Retail, a business-focused division, and International. In fact, it operates a larger international operation than Staples, Inc. (NASDAQ:SPLS), with stores in 57 countries as opposed to Staples’ 25, totaling 546 stores at the end of the last quarter.
The “merger of equals” should be accretive to combined earnings in the first year after the transaction closes. Between $400 million and $600 million in annual cost synergies should be realized by the end of the third year, partly stemming from reduced costs as well as increased scale and competitiveness. Although specifics concerning the store base were not announced at the deal’s signing, the companies have been discussing a new, smaller store format. Overall, I look for the combination, when consummated, to positively impact industry financial metrics.
Summing it up
Staples, Inc. (NASDAQ:SPLS) remains the leader amongst the office supply retailers. Its shares, up sharply since the beginning of this year, may still be a good selection for momentum or long-term investors. OfficeMax Inc (NYSE:OMX) and Office Depot Inc (NYSE:ODP) both serve certain product markets to a greater degree than Staples. The shares of both are trading on a merger deal that has been set for completion by the year’s end.
The article A Look at Office Supply Retailers originally appeared on Fool.com and is written by Damon Churchwell.
Damon Churchwell has no position in any stocks mentioned. The Motley Fool owns shares of Staples. Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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