(Bloomberg) –The parent of Office Depot plans to split the multichannel seller of office supplies into two publicly traded companies—one for the B2B market, the other for retail. The move will reshape the company as rival Staples renews its effort to acquire Office Depot.
ODP Corp. said it would retain its retail consumer and small-business products and services, while separating its B2B-focused Business Solutions Division contract unit and independent regional office-supply distribution operations. The transaction, expected to be completed in the first half of 2022, will occur through a distribution of shares of the new company as a tax-free dividend to ODP’s shareholders, according to a statement released Wednesday.
The transaction will aid the company in “improving our ability to meet the needs of our customers, while better matching assets and investment profiles of both companies to generate greater value for our shareholders,” Gerry Smith, chief executive officer of ODP, said in the statement.
Shares of ODP climbed 9.5% as of 8:23 a.m. before regular trading in New York. The stock had gained 45% this year through Tuesday.
The move, which ODP said will allow for more targeted investment, comes as Sycamore Partners-backed Staples continues to pursue an acquisition. The rival office supplies chain had made an offer earlier this year, which ODP said wasn’t likely to overcome regulatory hurdles. At the time, Office Depot said it would consider a sale of its retail operation but not its B2B business. Still, the Office Depot parent said it was open to reworking the terms of a deal.
Under Smith, Office Depot has been cutting costs and trying to push more into services. The company acquired CompuCom, a tech-services provider, in 2017 for about $1 billion as a hedge against declining demand for core office supplies such as paper. But the division has struggled and is now up for sale.
In 2020, the Business Solutions Division, which would make up the core of the new firm, generated $4.7 billion in revenue — about half of ODP’s total sales. Retail tallied $4.2 billion.
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