End Of An Era: Office Depot, OfficeMax Parent ODP To Be Acquired, Go Private

With its pending $1 billion acquisition by Atlas Holdings, the ODP Corp. ends nearly seven years of multiple reorganizations in an attempt to realize value from retail and business-to-business operations, including a disappointing attempt to build a national systems integration presence with its $1 billion acquisition of CompuCom, which it later sold for $305 million.

The ODP Corp., the parent company of Office Depot and OfficeMax, Monday said it has agreed to be acquired by private equity firm Atlas Holdings in a deal valuing the company at about $1 billion.

With the deal, ODP will become a private company when the deal closes, which is expected to happen by the end of 2025, subject to closing conditions and shareholder approval. The deal, for $28 per share in cash, represents a 34-percent premium over the company’s Friday closing share price.

The acquisition agreement paves the way to close a multiyear internal debate over the future of ODP.

Boca Raton, Fla.-based ODP previously rejected several acquisition and break-up proposals, the latest coming late 2023 from minority investor AREX Capital Management, which suggested ODP make some major structural changes including spinning out its Office Depot business.

The ODP restructuring saga started back in late 2019 when Office Depot started studying the possibility of forming a new holding company, the ODP Corp., as a way to better manage its retail operations from its business-to-business operations, which two years earlier had been significantly enlarged with its $1-billion acquisition of CompuCom, a major national systems integrator.

Staples, the big office supply rival to Office Depot and OfficeMax, in January of 2021 proposed acquiring ODP in a $2.1-billion deal that would include the eventual divestiture of Office Depot’s business-to-business-focused businesses. It was Staples’ third attempt to bid for Office Depot.

Those B2B businesses at the time included ODP’s own Business Solution Division and CompuCom.

Shortly after, ODP said it had already initiated a process to sell CompuCom as part of a strategic review of its business.

A year later, ODP moved to sell its CompuCom systems integration business to an affiliate of Variant Equity Advisors, a Los Angeles based equity firm in a $305 million deal that represented a significant discount to the $1 billion that it paid for CompuCom.

ODP in May of 2021 unveiled a plan to split Office Depot into two companies based on its retail and B2B divisions, a move which would have made it easier to come to a deal for its retail business to be acquired by Staples. However, ODP in June of 2022 decided instead continue to operate as a single company with both consumer and B2B focuses.

That move followed ODP’s move to transform its operations into a business-to-consumer and three separate business-to-business segments under its holding company structure, including:

Office Depot, a retailer of products and services to consumers and small businesses via its Office Depot and OfficeMax retail stores and ecommerce site.
ODP Business Solutions, a B2B solution provider across the U.S. and Canada.
Veyer, a supply chain, distribution, procurement, and global sourcing business to distribute products for ODPs businesses and for third-party customers.
Varis, a B2B digital commerce platform.

ODP did not respond to a CRN request for more information by publication time.

However, ODP CEO Gerry Smith (pictured), in a prepared statement, Monday said the deal will improve his company’s position for its next growth phase.

“Atlas brings an understanding of our industry, along with the operational expertise, resources and track record of supporting its companies that will fast forward our B2B growth initiatives and strengthen our position as a trusted partner to our customers. Atlas’ commitment demonstrates their confidence in our future and the strong momentum we’ve achieved through our focus on operational excellence and disciplined execution. We’re excited about our path for the future,” Smith said.

Atlas Managing Partner Michael Sher, in a prepared statement, said Atlas has a long history of turning public companies into successful private companies.

“Atlas operates like a diversified holding company, and we have a proven record of delivering the human and financial capital necessary to create long-term value in our businesses. The ODP Corporation’s leadership has already taken several steps to mitigate the challenging retail environment, and we are the right partners to support The ODP Corporation’s continued evolution in its next chapter. We look forward to completing this transaction which will provide a positive outcome for The ODP Corporation’s associates, customers, suppliers and shareholders,” Sher said.