Office Depot, OfficeMax Announce Merger, Then Don't
UPDATE: OfficeMax has posted a press release on its website confirming the deal, which can be viewed here.
Initially, reports suggested that a merger agreement had been completed late Tuesday night, but the press release has since been removed. The original press release can be viewed here.
Wednesday morning at 7:30 am EST, Office Depot had posted a press release that announced its quarterly and full-year earnings. The company announced (and then removed the press release) that the company had lost $0.06 per diluted share in the fourth quarter, a wider loss than the same period the year before. The company also announced that sales fell 12 percent from the same period a year ago.
However, buried in a note on page four of the press release was the following paragraph.
"On February 19, 2013, the Company entered into a definitive merger agreement with OfficeMax Incorporated, pursuant to which the Company and OfficeMax would combine in a tax-free, all-stock merger transaction. At the effective time of the merger, the Company would issue 2.69 new shares of common stock for each outstanding share of OfficeMax common stock. In addition, at the effective time of the merger, the Company's board of directors will be reconstituted to include an equal number of directors designated by the Company and OfficeMax. The parties' obligations to complete the merger are subject to several conditions, including, among others, approval by the shareholders of each of the two companies, the receipt of certain regulatory approvals and other customary closing conditions."
Thus, Office Depot reported that it had reached a merger agreement with OfficeMax for an all stock deal to be done at $13.50 per OfficeMax share. However, since then, the press release has been removed from Office Depot's website and now investors are scrambling to discover what is actually going on at the company.
Office Depot shares traded higher by 6.37 percent pre-market to $5.34 per share. OfficeMax shares traded 6.85 percent higher to $13.89 pre-market.
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