1. Office Merger Idiocy
ODP, to use Wall Street speak, is buying OMX in a $976 million all-stock deal. Everything else, however, seems to be TBD.
Office Depot (ODP - Get Report) announced Wednesday it will purchase smaller rival OfficeMax (OMX), completing a deal that was long anticipated on Wall Street as the office-supply category has come under tremendous pressure from the likes of Amazon and Wal-Mart. Office Depot brass insisted the deal was a merger of equals and not an acquisition, despite the fact that its shareholders would own a slightly larger part of the combined company once the smoke clears. Office Depot shares closed down 17% at $4.18, while OfficeMax sank 7% to $12.09 on the news.That's what we know at least. Everything else -- like its store-closing strategy, headquarters, name and CEO -- is to be determined (aka TBD). Heck, to continue with the Wall Street acronyms, this deal might as well have been a SPAC if they didn't already have the stores! (Special-purpose acquisition company, that is. Or, more plainly, a company that sells shares and then finds something to buy later.) Yeah, there's a lot of laughing going on at Staples (SPLS) right now. Staples, by the way, has about a 40% share of the office-supply market, an amount that will still be slightly larger than its newly combined nameless competitor. Perhaps most hilarious is the idea that the respective companies' current CEOs will both be interviewing for the top job of the new entity. Normally a new leader is chosen before the deal is announced. Not so here. The companies stated Wednesday that Neil Austrian, Office Depot's chairman and CEO, and Ravi Saligram, the president and chief executive of OfficeMax, will keep their old jobs during the search process. The board, however, will be split evenly while these guys get their resumes together. "It would be premature to select a CEO until we understand what the FTC is going to do," Austrian replied when asked about the decision not to select a new CEO. (The FTC being the Federal Trade Commission, which breaks up mergers that harm competition.) Get off it, Austrian. The FTC is not going to do anything now that margins across this entire category are collapsing due to all the online competitors jumping in. That antitrust case is long dead and buried. The only thing premature was the early release of the merger announcement by Thomson Reuters, which published the news Wednesday morning only to take it down soon after because the details were still not fully in place. Once the so-called specifics were ironed out later that morning, the deal was officially announced online. What a joke from start to finish. All we can say is: LMFAO. (If you don't know what that means, ask your kids. Wait. Maybe not.)