Acquisition of OfficeMax by Office Depot: Case Study

791 Words3 Pages
Acquisition of OfficeMax There is a good opportunity for Office Depot to acquire OfficeMax. With the combined revenue and locations across the world, the acquisition would prove to boost competitive position and ability to generate stronger revenue numbers. Still, Office Depot is not in the best financial position for a massive acquisition, as its market value has shown continuous decline over the last few years, and thus finding ways to fund the acquisition is crucial before taking on such an endeavor. Although the merger would undoubtedly be an expensive endeavor for Office Depot in a vulnerable time, it is necessary to ensure a stronger future. Staples is one of the biggest competitive threats in the office supply industry. With both Office Depot and OfficeMax showing the clear inability to keep up with their competitor, many within the industry have begun pushing the two companies to merge in order to boost their ability to compete with their larger rival. According to the research, the two "may need to merge after heightened competition for office-supply sales and a 26-year high in the U.S. unemployment rate helped wipe out almost $13 billion of shareholder value" (Ciolli, Kucera, & Nazereth, 2011). Recently, OfficeMax has proven to have better than expected profit rates, making it a potentially lucrative, yet expensive buy for Office Depot (Zacks, 2012). Moreover, if the two companies merged, it would result in major cost reductions in operations for the newly

More about Acquisition of OfficeMax by Office Depot: Case Study

Open Document