Acquisition of OfficeMax by Office Depot: Case Study

Question 1: What were the rights of Walmart, the employer, during these two organizing drives?

According to the researchers the increased value results from an opportunity to utilize a specialized resources which arises solely as a result of the merger (Jensens & Ruback, 1983; Bradle, Desai and Kim , 1983). For creating operational and financial synergies managers believe that two enterprises will be worth more if merged than if operates as two separate entities. Thus, the two companies, A and B:

Home Depot’s corporate-level strategy is one of internal growth. This conclusion was reached based on the increased focus that Home Depot has placed on growing its existing online and traditional retail operations. Between 2016 and 2018, Home Depot is expected to invest approximately four billion dollars into improvements in its online and physical retail locations in order to make both work more synergistically and grow sales (Petro, 2016). Home Depot hopes that these investments will continue to increase sales at both its physical and digital retail locations, thereby growing the company without adding significant numbers of physical locations.

The market responded favorably to the merger between Loblaw Companies Ltd and Shoppers Drug Mart. News of the agreement sent Shoppers shares to increase by approximately 27% on TSE before falling back to 13%, and Loblaws shares were up almost 9% (Globe and Mail, 2013). On the 15th of July 2013 the announcement was made public, and both companies shares price closed at an alltime high of $50.13 per share for Loblaws and $60.12 per share for Shoppers. During the rest of the same month, Shoppers shares price kept on risen, while Loblaws shares price maintained its usual price below the $50 standpoint (Appendix B).

Based on the above considerations, the Ke ratio of the merger company will be 11.54%. Furthermore, for the revenue growth and ROE of the merger company, there are more risks than benefits. HP’s revenue may have a recession curve in the short term. Although the merger will bring cost savings of $2.5 billion, HP cannot realize these expected benefits immediately. Other than this, there were questions on the organization culture as well. If HP could not manage its organization properly, integration would only add on to the difficulties. The biggest factor of all is that to integrate the culture existing in the two companies would be a very difficult job. Based on all the considerations, we assume that the revenue growth rate after the merger would be 3.5% and the ROE would be 11%. And as a result, the combined stock price would be 9.0. (See Exhibit 3).

A broader view of objectives indicate that long-term opportunities exist in areas such as supply chain improvement, acquisition synergies, and increased pharmaceutical sales. The merger with Alliance Boots provides a ripe platform for negotiation

Major companies and corporations that comprise a big part of the United States economy take advantage of certain opportunities such as going public through IPO’s, acquisitions, and mergers. These three approaches provide an additional resource and many times an advantage to expand, become more profitable, or simply save a company’s existence.

firms interact.” Currently the office supply market is saturated and the competition is tight. The leading contenders for this type of market are Staples and Office Depot, but there are many choices available to consumers looking to get the most value for office supplies. It is ironic that both Staples and Office Depot opened for business in 1986. These companies fall under a monopolistic competition structure. Staples and Office Depot maintain a high marketing presence and are recognized in the office supply industry. But because of the fierceness of the

After Conducting the SPACE Matrix the conclusion may be made that Staples in the Defensive Profile. It is wise to choose a one of the previously stated strategies that will coincide with this profile. A company in a defensive strategy is financially troubled in an unstable market. Staples is definitely in this position. They are not making enough to stay operating as they are. The industry they are in is also unstable. There are new online competitors and other issues that are making the industry

Office Depot is a supplier of office products and services. The company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping, and computer setup and repair. An S&P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. Office Depot is one of the biggest office supplies retailers, but its sales revenue decreased dramatically 26% from 14.5 billion dollars in 2008 to 10.7 billion dollars in 2012.

When it comes to the impact of the Five Forces of Competition and its effect on the performance of Staples and Office Depot, there does not appear to be a strong threat of new entrants in the big-box retail office supply segment of the industry. It seems unlikely that anyone will want to open a new office supply store. While there is a level of service differentiation between the two companies, there is little product differentiation between the two. Likewise, there would be little product differentiation from a new competitor. The threat of substitutes comes into play between Staples and Office Depot in that both companies offer basically the same products. If the customer can’t get what he wants at one store, he can go to the other. Likewise, if the customer becomes disenfranchised with one company for whatever reason, he can easily go to the other company. There doesn’t seem to be much bargaining power of customers or suppliers. There does seems to be a strong industry rivalry which, as with most industries, is the major determinant of the competitiveness of the industry.

Office Depot achieves its strategy by offering products that are less expensive than its competitors. This allows Office Depot to make sales to the largest possible consumer base and yet, at the same, still differentiating itself by providing more of the problem solving, and innovativeness desired by many corporate and some retail customers. Over the past twenty five years, Office Depot has been able to enter into various global locations and develop or maintained its competitive advantage by following this strategy. In fact, this strategy has paid off well over the past several years. Office Depot consistently ranks high in terms of customer recall of office supplies and business solutions. This quantitative measurement may be used by Office Depot to quantify the Company’s growth in this area.

FTC employed structural, documentary, statistical, econometrics and financial evidence to verify that the proposed merger of Staples and Office Depot will lead to increase in market concentration, market prices and stock prices, and thus support FTC’s contention that this merger will cause an anticompetitive effect on Office Superstore market. Staples and Office Depot made a plain and useless contradiction. Finally, the Court announced to agree with FTC, and granted a preliminary injunction on this merger. This paper mainly focuses on FTC’s evidence and analysis.

Intensity of rivalry among competitive firms. In the past, Staples has been successful in fighting against its competitors with its low prices and brand loyalty, but recently against Amazon there are bigger obstacles to overcome. The rivalry with Amazon, Walmart, Target and wholesale clubs is intense as they have more resources to use against Staples, such as the range of its customers and a thriving business line. Therefore, seeing that the rivalry is intense, it presents a threat to their profitability (Hill et al., 2015, p. 51). From this perspective, the competitive rivalry will be considered as high for Staples.

The global player Wal-Mart operates in 14 different markets all around the world, serving 176 million customers every week. Today, the second biggest company of the world, concerning turnover which amounts to 312,427 million US-$, categorizes its operational facilities into five divisions. Among those divisions are the Wal-Mart discount stores, offering convenience and low-priced goods. Wal-Mart supercenters are the biggest stores, being open 24/7 hours and employing a workforce of 350 people, selling all kinds of groceries and general merchandise at the lowest possible price. Wal-Mart neighborhood markets are specified in