“Business as usual” as OfficeMax shareholders anticipate merger

Posted on May 1, 2013


The shares of Office Depot and OfficeMax have lagged behind Staples since the recession.

The shares of Office Depot and OfficeMax have lagged behind Staples since the recession.

It began at 2:00 p.m. and adjourned by 2:15 pm. About 30 shareholders and executives of OfficeMax Inc. had little to say during the company’s short annual meeting at the Hotel Arista in Naperville Monday afternoon.

That’s because in late February, the Naperville-based company announced a $1.2 billion merger with Office Depot Inc. Both companies have been losing marketshare to Staples Inc. in recent years.

OfficeMax and Office Depot are still awaiting Security and Exchange Commission approval of the impending merger so OfficeMax executives were not at liberty to comment on potential changes in corporate structure.

“Most of what’s going to be of interest is going to be left unspoken until they have SEC approval,” said Scott Tilghman, an analyst at B. Riley & Co., in an interview before the meeting.

In early April, OfficeMax executives announced a search for a new CEO of the combined company. But they have not released further information including potential new names for the company, a new headquarters location or other decisions about who will be part of the management team.

Tilghman described the company’s fourth-quarter earnings as “a bit light” relative to analyst estimates. He also said the merger “looks good on paper,” and even if it isn’t approved, OfficeMax is well positioned for growth.

“We believe [OfficeMax] shares remain attractive” because of their depressed value, the potential for a special dividend of up to $1.50 a share, and the company’s sustainable business model, he wrote in a recent research note.

Approval of the merger is not a slam-dunk. In 1997, the Federal Trade Commission examined and ultimately shut down a proposed merger between Office Depot and Staples.

Besides the merger, Monday’s annual meeting was business as usual as shareholders voted on four items, all of which had passed, including executive compensation packages and an increase in number of authorized shares.

Attendees seemed more focused on local actions by the company. The most vocal people in the room were not the shareholders, but people from nonprofits that had benefited from OfficeMax’s generosity.

Army Sgt. Mark Evans commended the board for its efforts with “Pizzas 4 Patriots,” a local non-profit that sends Chicago-style pizzas to troops abroad.

“The impact is huge,” Evans said. “The biggest casualty in combat in war is the mind.”

Evans said with the help of OfficeMax, his organization was able to reach troops in Kandahar, South America and South Africa, and it plans to reach every troop in Afghanistan.

OfficeMax Chairman Rakesh Gangwal appreciated the praise. “It’s these little things that matter in the little things we do in putting our society together,” he said.

An OfficeMax representative said there will be another, more expansive shareholder meeting this summer to discuss potential changes in conjunction with the proposed merger.