Managed services News
Office Depot Ends Planned B2B, Consumer Split
Joseph F. Kovar
ODP says that it will continue to operate as a single company for now with both consumer and B2B focuses, and will do so under its recently-completed organizational transformation into four organizations focused on retail, B2B, supply chain, and digital commerce areas.
Office Depot, which has for some time been looking at separating its business-to-business and consumer operations into two separate businesses, Tuesday said it has decided to remain as one for the time being, and will not for now sell its consumer business.
Office Depot Tuesday also said it has finished its organization transformation into four separate segments.
Office Depot, an operating entitiy of the ODP Corp., had been talking about splitting into two businesses, one focused on business-to-business and the other on retail, since early 2021 when rival office supply company Staples made a bid to buy all or part of Office Depot.
Office Depot in January said that its board of directors decided to delay the split of the company into two separate public companies after the company received interest in its consumer business and reviewed public and private non-binding proposals to purchase its consumer businesses.
Office Depot in May had said a decision over whether to sell its consumer business would be coming soon.
Office Depot on Tuesday said the company recently completed transforming 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.
An Office Depot spokesperson told CRN in an emailed response to a request for more information that the press release issued Tuesday will be all the information the company is providing for now.
However, in a prepared statement, the ODP board of directors said the company decided to not pursue its previously-announced plan to separate the company into two independent companies due to market conditions.
“Given current market and macroeconomic conditions, as well as the benefits of maintaining purchasing and supply chain synergies, the board has determined that now is not the right time to further pursue separating the Company into two independent, publicly traded companies,” said Joseph Vassalluzzo, chairman of ODP’s board of directors, in the statement. “However, the completion of our internal reorganization will make such a potential separation substantially simpler should the Company determine to resume the separation process following a change of market conditions in the future.”
ODP in January sold its CompuCom Systems IT solution provider subsidiary to an affiliate of Variac Equity Advisors in a deal worth up to $305 million, a number significantly lower than the $1 billion Office Depot paid for CompuCom in 2017.
The sale of CompuCom and the move to divide the remainder of ODP had been expected ever since Office Depot, a leading provider of business services and supplies and technology, early last year unveiled a bid by rival Staples to acquire all or part of ODP.
USR Parent, the corporate name of Staples, in January of 2021 offered to acquire Office Depot in a $2.1 billion deal. As part of that deal, Staples proposed the eventual divestiture of Office Depot’s business-to-business-focused holdings, including IT managed service provider CompuCom. USR Parent in November, 2021 said its non-binding $1-billion cash offer to purchase ODP’s consumer business remained in play.
However, ODP in December, 2021 received a non-binding proposal from a different third party to acquire its consumer business. The terms of that proposal were not released. Because of that, the ODP board of directors has decided to delay further work on the separation of the company to avoid potentially unnecessary costs.
Office Depot in May, 2021 unveiled plans to separate into two independent, publicly-traded companies by means of a tax-free spin-off to ODP shareholders. The first would have been its retail consumer and small business services that are sold through ecommerce and about 1,100 retail Office Depot and OfficeMax location.
The second would have been based on Office Depot‘s B2B business, which includes the ODP Business Solutions Division, Canada-based Grand & Toy, and ODP’s regional office supply distribution business, along with ODP’s B2B digital platform technology business.