Office Depot, Inc. ODP, a leading global provider of office supplies
and services, today announced that the Company has filed its definitive proxy
statement with the U.S. Securities and Exchange Commission ahead of the
Company's upcoming Annual Meeting of Shareholders on August 21, 2013.
Along with the proxy statement, Office Depot also sent a letter to all
shareholders outlining the progress the board has made on two transformative
and value-enhancing transactions: the proposed merger agreement with OfficeMax
and the sale of Office Depot de Mexico. The letter also highlights the other
key strategic initiatives already well underway under the current Board to
refocus the Company and maximize value for all Office Depot shareholders while
positioning the Company for long-term growth.
Office Depot urges all shareholders to vote the WHITE proxy card for its ten
Board nominees in order to continue the progress and momentum they have
established in doing what is best for all shareholders.
A copy of the letter follows:
July 22, 2013
Dear Fellow Office Depot Shareholder:
Enclosed with this letter are Office Depot, Inc.'s proxy materials for the
upcoming annual meeting of shareholders on August 21, 2013. This is a very
important meeting where you will be presented with a significant choice about
your investment and the future path of Office Depot. This vote could impact
the value of your investment in the company and your Board's continuing
efforts in successfully executing our strategic plan.
We encourage you to read our enclosed proxy materials carefully and vote the
WHITE card today in support of our 10 director nominees – Neil R. Austrian,
Justin Bateman, Thomas J. Colligan, Marsha J. Evans, Eugene V. Fife, W. Scott
Hedrick, Kathleen Mason, Michael J. Massey, Raymond Svider and Nigel Travis.
Your Board and management team have spent the past few years developing and
implementing a comprehensive plan to effectively overcome the challenges
facing the office solutions industry, as more fully described below. That plan
is now starting to bear fruit, as demonstrated by the announcement of a merger
with OfficeMax and the successful sale of our interest in Office Depot de
Mexico. We recognize that there are still challenges to overcome, however,
particularly in ensuring the completion and successful integration of the
OfficeMax transaction. We currently expect to close the OfficeMax deal by the
end of calendar year 2013, after all regulatory approvals have been received
and all other conditions to closing have been met.
The critical components of the Board and management's strategic plan include:
* Merger with OfficeMax: We are working diligently toward closing our
proposed merger with OfficeMax announced in February 2013, creating the
opportunity for Office Depot shareholders to benefit from an estimated
$400-600 million in annual synergies as well as enhanced cash generation
and liquidity for the company to fund internal and external opportunities
for continued growth. The merger was recently approved by shareholders in
July 2013, with over 98% of Office Depot shareholders voting in favor of
the merger, and has been cited by numerous analysts as the right strategic
step for the company.
* Sale of Office Depot de Mexico: We recently closed on the sale of our
joint venture stake in Office Depot de Mexico to Grupo Gigante for
approximately $690 million, an 11.6x EBITDA multiple, after long-term
discussions with our joint venture partner over the future course of our
arrangement with them. This sale generated after-tax proceeds of
approximately $550 million, which significantly enhances the company's
liquidity as we integrate the OfficeMax transaction.
* Multi-year strategic plan: Outside of these transactions, we are making
solid progress on our multi-year strategic plan, which has resulted in
over $1 billion in benefits since 2007, including approximately $200
million in 2012 and an estimated $120 million in 2013.
In short, we are running full steam ahead in our efforts to maximize value for
all Office Depot shareholders by addressing the recent challenges in our
industry and thereby positioning the company for long-term growth. That
process was developed by this Board of Directors, and your vote is critical to
helping ensure the company's director nominees have the opportunity to finish
executing upon the strategic plan.
As you may be aware, an activist investor, Starboard Value LP (together with
its affiliates and related parties “Starboard”), is looking to add their own
hand-picked director nominees to our current Board. We urge you to disregard
any proxy materials from Starboard. Your Board strongly believes that the
election of Starboard's nominees, who do not have the detailed knowledge and
experience necessary to oversee the successful implementation of the current
Board's strategic plan to maximize shareholder value, would retard and
possibly imperil the continued, successful implementation of that plan.
Ironically enough, Starboard is openly supportive of most of the Board's
actions, including the merger with OfficeMax and sale of our interest in
Office Depot de Mexico, among other actions. While we respect the right of all
of our shareholders to have their voices be heard, now is not the time to
replace any of our directors with new directors lacking detailed knowledge of
our business and operations, given the importance of the successful closing
and then integration of the OfficeMax transaction, in particular, to creating
shareholder value. This is not the time for on-the-job training.
Office Depot Is On the Right Track to Increase the Value of Your Investment
The actions in motion right now to unlock Office Depot's true value have taken
years of careful planning and significant time and energy from the Board to
negotiate and manage. A critical component of that plan -- the proposed
OfficeMax merger -- has not yet closed and will require continued close
attention from the Board. In fact, many of the critical issues related to the
OfficeMax merger are actively being addressed and the Board is deeply involved
in managing these pivotal decisions. This includes:
* Joint Board Committee Overseeing CEO Search – On April 9, 2013 we
announced the formation of a joint board committee with OfficeMax to
oversee the process to select a CEO for the combined company. This
committee, led by Office Depot director Nigel Travis and OfficeMax
director Jim Marino, has already moved ahead with this process by hiring
global talent management consultancy Korn/Ferry International, which has
commenced a search in line with a clear set of requirements developed by
the committee.
* Integration Management Office – At the same time, we also announced the
formation of a Steering Committee and Integration Management Office with
OfficeMax to oversee integration planning, with the shared objective of
mutually developing an integration plan designed to ensure a smooth and
productive transition and capture the projected $400-600 million in annual
cost synergies by the third year following the transaction's close. This
group is already hard at work and has hired the Boston Consulting Group to
provide support to both companies.
While the successful integration of the OfficeMax transaction is critical to
our efforts to create shareholder value, your Board of Directors and
management are fully committed to improving the company's core profitability
and performance to maximize value for all shareholders. We remain focused on
our multi-year strategic plan, which has already begun demonstrating
significant progress that will deliver higher value to all Office Depot
shareholders.
These key operating initiatives, already well underway for 2013, include:
* Improving the web experience and making omni-channel a reality;
* Growing services and solutions;
* Increasing own brand and direct import penetration;
* Driving small- and medium-size business customer growth;
* Improving the International Division cost structure;
* Working with vendors to decrease cost of goods sold; and
* Reducing overall expenses.
We expect continued execution of these initiatives will result in projected
adjusted EBIT growth of over 14% in 2013.
Don't derail the significant progress Office Depot's Board and management have
made to unlock value for shareholders. We ask for your continued support of
our director nominees. Vote the WHITE proxy card today for your Board
nominees.
Office Depot's Board is Best-Qualified to Complete Value Creation Initiatives
Your current Office Depot Board is comprised of highly qualified nominees, who
bring deep knowledge specific to Office Depot and our business, as well as
significant relevant industry and operational experience, including years of
service as directors, CEOs and senior-level executives; financial expertise
with public company and private equity leadership; and retail and governance
experience that supports long-term shareholder value creation. Most of all, by
developing the strategic plan to create shareholder value, these experienced
leaders have demonstrated their continued commitment to transform Office Depot
for the benefit of all the shareholders and are deeply engaged in managing
these ongoing efforts.
Your Board strongly believes that a change in the guard at this stage could be
disruptive to our progress to date and is not in our shareholders' best
interests.
With such significant progress underway, our Board strongly believes that new
Board members with different objectives will mean much of the hard work and
joint decisions already done would have to be rethought or even undone,
potentially disrupting a smooth integration process for our employees,
customers, vendors and shareholders. Now is not the time for drastic change.
Vote the WHITE Card Today For Our Board Nominees Who Are Charging Ahead With
Creating a Better Office Depot for Shareholders
We have also recently announced the addition of a new nominee to our current
Board of Directors. Michael Massey, previously Chief Executive Officer and
President of Collective Brands, Inc. has agreed to serve on the Office Depot
Board and stand for election at the upcoming annual meeting. Mr. Massey is a
highly qualified industry veteran who brings over 23 years of significant
retail experience to the Office Depot Board, having served in numerous senior
level roles at Collective Brands and The May Department Stores Company.
Like you, we want what is right for Office Depot and all of its shareholders.
Your vote is important in this election, and we urge you to vote TODAY so that
your voice is heard. To elect the Office Depot's Board's nominees, we
encourage you to vote by telephone, by Internet, or by signing and dating the
enclosed WHITE proxy card and returning it in the postage-paid envelope
provided.
We urge you now to allow your Board and management team to do what is in the
best interests of all shareholders – continue executing on our strategic plan
for operational improvement, close the OfficeMax transaction, continue making
progress on our CEO search, and our integration planning efforts to unlock
real value for all shareholders.
Thank you for your continued support.
W. Scott Hedrick Neil R. Austrian
Lead Director Chairman and Chief Executive Officer
Your Vote Is Important, No Matter How Many Or How Few
Shares You Own
If you have questions about how to vote your shares,
or need additional assistance,
please contact the firm assisting us in the
solicitation of proxies:
INNISFREE M&A INCORPORATED
Shareholders Call Toll-Free: (877) 825-8621
Banks and Brokers Call Collect: (212) 750-5833
REMEMBER:
We urge you NOT to vote using any Gold proxy card sent
to you by Starboard,
as doing so will revoke your vote on the WHITE proxy
card.
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