Featured Company News –Office Depot Divests its Chinese Operations

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LONDON, UK / ACCESSWIRE / June 5, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for office supplies retailer Office Depot, Inc. (NASDAQ: ODP). The Boca Raton, Florida based Company announced on June 02, 2017, the sale of its business in mainland China to Shanghai M&G COLIPU Office Supplies Co., Ltd. The decision is part of Office Depot’s business plan, which it had formulated in 2016, to divest from all international businesses. The financial details and other terms of the deal were not disclosed by the Companies. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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The deal is expected to close within next few months subject to gaining regulatory approvals and other closing conditions.

About the Buyer

The buyer, Shanghai M&G COLIPU Office Supplies Co., Ltd is a wholly – owned subsidiary of China-based Shanghai M&G Stationery Inc. Shanghai M&G Stationery, a public Company, was founded in 1996 and is the No.1 comprehensive stationery manufacturer and supplier in China. Its main operations are at the M&G Industrial Park which is spread over an area of 300,000 square meters and located in the Guangming Economic Zone in Fengxian District, Shanghai, China. It has more than 10 facilities that manufacture various types of pens, notebooks, correctors, PP files, and sticky notes. It markets its products across Southeast Asia, Europe, Japan, United States, and Middle-East.

Why is Office Depot exiting from all international operations?

Office Depot is a leading global retail chain for supplies and stationery products for office, school, home or other requirements. It has over 1,400 retail stores in North America and has a global network of wholly owned franchisees, licensees and alliance partners. In FY16, the Company recorded annual sales of $11 billion.

In August 2016, Office Depot had revealed a three-year strategic plan that would lead to a complete reorganization of its organizational structure and consolidation of its various businesses. The Company aimed to focus on cost savings and improving its business in North America. The Company had announced that it was looking at strategic alternatives for its business in Europe and Asia due to declining sales in these regions.

International Divestments

Office Depot started off FY17 with the completion of sale of its European Operations in January 2017. The European business was bought by The AURELIUS Group. In April 2017, Office Depot sold off its business in Australia and New Zealand to global private equity firm Platinum Equity. In late April 2017, Office Depot sold off its business in South Korea to a Hong Kong and Korean based direct investment firm, Excelsior Capital Asia.

The financial details and terms of these deals were not disclosed.

Changes in its management team

In-line with its organization restructuring, Office Depot announced the appointment of Gerry P. Smith as Chief Executive Officer. Mr. Gerry Smith took charge from Roland Smith from February 2017. Roland Smith had announced his retirement in August 2016 and was waiting for a new CEO to be appointed before he left the Company.

In May 2017, Office depot announced several new changes to its top management team. Steve Calkins took over as President, Business Solutions Division, focused on serving Office Depot’s B2B customers. Troy Rice was appointed as President, Retail Division, focusing on our B2C customers. Michael Allison took over as Executive Vice President, Chief Administrative Officer. Kevin Moffitt, who is currently Senior Vice President, ecommerce, took on the additional responsibilities as Chief Digital Officer. John Gannfors was newly appointed to the position of Executive Vice President, Transformation and Strategic Sourcing. Other appointments included Stephen Hare as Executive Vice President and Chief Financial Officer, and Timothy Beauchamp as Executive Vice President, Supply Chain.

Background

In February 2015, Staples, Inc. (NASDAQ: SPLS) had announced the acquisition of Office Depot. The US Federal Trade Commission (FTC) had objected to the merger and filed a case against both the Companies citing that the merger would create a monopolistic organization that would kill the competition in the office supplies and stationery business and harm the buyers. Both Companies had argued that the consolidation of the business would enable them to take on the competition from Companies like Walmart and Amazon.

In May 2016, US District Judge Emmet Sullivan blocked the $6.3 billion deal after which Staples and Office Depot terminated the merger. Office Depot received $250 million as termination fee from Staples.

Office Depot had closed nearly 349 stores between the 2014-2015 period. In 2016, the Company had announced the closure of an additional 400+ stores due to declining sales. The merger was seen as a last chance to survive in an adverse market condition as well as create value for its shareholders.

Last Close Stock Review

On Friday, June 02, 2017, the stock closed the trading session at $5.40, climbing 4.65% from its previous closing price of $5.16. A total volume of 18.42 million shares have exchanged hands, which was higher than the 3-month average volume of 5.55 million shares. Office Depot’s stock price skyrocketed 9.09% in the last one month, 10.88% in the past six months, and 52.11% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 19.47%. The stock is trading at a PE ratio of 4.24 and has a dividend yield of 1.85%. The stock currently has a market cap of $2.78 billion.

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