Its failed merger with rival Staples Inc. well behind it, Office Depot Inc. is sharpening its focus on the North American market by agreeing to sell its European business to the Aurelius Group, an investment firm, Office Depot said Friday.
“The sale of our European business will allow us to streamline operations and focus our resources on markets that will provide the best opportunity to implement our recently announced three-year strategic plan,” Roland Smith, chairman and chief executive officer for Office Depot, said in a statement. “The Aurelius Group has a proven track record of positioning its acquisitions for future success and we look forward to working with them to complete this transaction.”
Since 2005 Aurelius has completed more than 70 transactions across Europe and specializes in investing in companies and corporate spin-offs, as well as complex divisional carve-outs from companies.
In Europe, Office Depot operates e-commerce sites under its Office Depot brand for businesses in 13 countries, and e-commerce sites under the Viking brand across 14 countries. It also operates in 12 countries “customized contract” e-commerce sites available only to business customers who register accounts on those sites. Office Depot’s European business employs about 6,000 people and operates as part of the company’s International Division, which also includes e-commerce sites in the Asia-Pacific region, the Mideast, Central America and South America. It also operates close to 100 stores in its International Division, including stores in France and Sweden.
Office Depot said the deal with Aurelius is structured as an equity sale, for “nominal consideration,” with the buyer acquiring the European business with its assets and liabilities. Annual revenue for the European business is approximately EUR 2 billion euros (US$2.25 billion). The transaction, which has been approved by Office Depot’s board of directors, is subject to regulatory approval from the European Commission and consultation with the central works council, which represents employees in France, Office Depot said. The transaction is expected to close by the end of 2016.
Office Depot’s stock rose 1.8% percent to $3.70 at 1:49 p.m. Eastern time in New York trading. The shares had slid 36% this year through Thursday. Office Depot is No. 42 in the B2B E-Commerce 300; Staples is No. 21.
Office Depot and Staples terminated their planned merger in May after a federal judge sided with the Federal Trade Commission, which had objected to the $6.3 billion merger on anti-trust grounds. If the aftermath of the aborted merger, Staples CEO Ron Sargent resigned and was replaced by Shira Goodman, who was named interim CEO in June before Staples announced her appointment on Sept. 25 as president, CEO and a member of the board of directors. Goodman had been president, North America operations, overseeing e-commerce, business-to-business and retail operations. On a conference call with stock analysts last month, Goodman said Staples was looking into “strategic alternatives” for its European business so the company can concentrate on its North American business.
Office Depot has said that Smith plans to retire as CEO as soon as the company finds a replacement, which it it expects may be early next year. Meantime, Office Depot has promoted Troy Rice from executive vice president of retail to chief operating officer for North America, where hel’ll oversee e-commerce and other operations.
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Bloomberg News contributed to this report.This article was updated on Sept. 26.