This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Starboard Urges Office Depot To Explore Sale Of Office Depot De Mexico Joint Venture Interest

Dear Members of the Board,

As you know, Starboard Value LP, together with its affiliates ("Starboard"), currently owns approximately 14.8% of the outstanding common shares of Office Depot, Inc. ("Office Depot" or the "Company"), making us Office Depot's largest common shareholder.  Additionally, pro forma for the proposed merger of Office Depot and OfficeMax Incorporated ("OfficeMax"), we believe Starboard would be the largest shareholder of the combined company. 

We appreciate the ongoing dialog we have had with certain members of Office Depot's Board of Directors (the "Board") over the past three months.  While we continue to have discussions regarding board representation, we feel it is necessary that we again share our thoughts regarding the Company's 50% joint venture interest in Office Depot de Mexico (the "JV Interest").  As we previously outlined in our letter on September 17, 2012, and as we have subsequently discussed with you on multiple occasions, we believe the significant value of the JV Interest is not fully reflected in the stock price of the Company.

On February 15, 2013, the Board received an offer from its joint venture partner, Grupo Gigante S.A.B. de C.V. ("Gigante"), to purchase the JV Interest for $690.5 million.  Given that Gigante's offer expires this Thursday, February 28, we believe the Board of Office Depot should promptly obtain consent from OfficeMax under the merger agreement to immediately explore a sale of the JV Interest to maximize value for shareholders.  In our view, a sale of this asset at a full and fair price is clearly in the best interest of both Office Depot and OfficeMax shareholders.  If the merger is completed, then both Office Depot and OfficeMax shareholders would benefit from the sale because the combined Company would have a significantly stronger balance sheet from which to transform the pro forma company and execute on any and all potential synergies.  Similarly, if the merger is not completed for any reason, then Office Depot shareholders would benefit from the sale because the stand-alone Company would be financially stronger, having previously sold the asset. 

In our view, it is the Board's fiduciary duty to monetize the JV Interest given the clear benefit to both Office Depot and OfficeMax as a combined company and Office Depot as a stand-alone company.  We believe OfficeMax should be fully supportive of the Board exercising its fiduciary duties. We recognize that OfficeMax is potentially conflicted as a sale of the JV Interest, while beneficial to the combined company, would also be beneficial to Office Depot as a stand-alone business and, therefore, may strengthen a competitor should the merger not be completed.  If OfficeMax does not consent to Office Depot's negotiations with Gigante or any other potential buyer regarding the sale of the JV Interest, we would view this as both unreasonable and potentially anti-competitive. 

Stock quotes in this article: ODP 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs