Business

Office Depot and OfficeMax set for merger: report

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Office romance is in the air — or, at least, there is talk of a long-awaited hookup.

Office Depot and OfficeMax — longtime retail rivals who for years have been the subject of on-and-off merger speculation — are finally nearing a deal that could be announced as soon as this week, according to reports.

The deal is expected to be stock-for-stock, although precise terms couldn’t be learned, according to a report yesterday in the Wall Street Journal, which added that the deal could still fall apart.

Officials at Office Depot and OfficeMax declined to comment.

If a merger is consummated, analysts said the companies could save at least half a billion dollars while closing as much as 20 percent of their stores and slashing their workforces.

Both chains have been getting pummeled by Staples, whose $24.4 billion business is more than that of its two smaller rivals combined.

Office Depot, which has 39,000 employees, generated $11.5 billion in sales last year. OfficeMax, which has 29,000 workers, had revenue of $7 billion.

A bigger problem, analysts say, is increased competition with online rivals like Amazon, which are luring shoppers away from stores with lower prices and free shipping.

“Consolidation would address the office supply sector’s disadvantaged industry structure,” Sanford C. Bernstein analyst Colin McGranahan wrote in a research note Friday.

Speculation about a merger heated up last fall when activist hedge fund Starboard Value disclosed a 14.8 percent stake in Office Depot, demanding that the company increase its profitability and stock price.

Office Depot shares rose 2 percent on Friday to close at $4.59. OfficeMax shares slipped 1.29 percent to $10.75.