Starboard Urges Office Depot to Revoke 'Poison Pill'

Starboard Value LP , the largest common shareholder of Office Depot, Inc.

, with a 14.8% ownership stake, delivered a letter today to the independent members of the Company's Board of Directors (the "Board") denouncing the Board's adoption of a "poison pill" rights plan.  Starboard demonstrates in the letter how the "poison pill" is part of a scheme designed to preserve and entrench the Board by limiting the influence of shareholders over Board composition and other matters, while allowing the Board to maintain and increase its effective voting control over the Company.  Specifically, Starboard explains how the "poison pill" when taken together with the voting agreement provisions under the Company's Investor Rights Agreement with BC Partners, Inc. effectively provides the Board with current voting authority over securities representing in excess of 22% of securities eligible to vote while limiting common shareholders to economic ownership of only 15% and maximum voting authority of only 11.7%.  Further, Starboard highlights specific exemptions under the "poison pill" that allow the Board to further increase its effective voting authority while at the same time diluting common shareholders' voting authority.  One such exemption paves the way for the Board to continue to pay in-kind quarterly dividends to BC Partners on its 10% perpetual preferred stock.  Another exemption permits BC Partners to acquire another 2% of common shares.  These exemptions are particularly egregious since BC Partners is required to vote with the Board on the election of directors and other matters that are up for shareholder vote.