PITTSBURGH (KDKA) — They are calling it a merger of equals — the consolidation of Office Max, a Illinois-based company, with Office Depot, an Florida-based company — to become one giant office supply store better positioned to take on number one Staples.
“Honestly, whichever one I’m closer to… I compare prices, but they’re almost identical in quality,” observed Dave Miller of Monroeville outside an Office Max store in Monroeville.
The all-stock deal is valued at $1.2 billion — with holders of Office Max shares to receive 2.69 shares of Office Depot for every Office Max share they own.
The new company, whose name has not been determined, would have total annual sales revenue of $18 billion.
One consequence of this merger is the likely consolidation of stores.
This Office Max in Monroeville, for example, is only 1.7 miles from an Office Depot right down the road. One of them is likely to close.
Nobody is predicting where, when, and how many employees might be affected. Office Depot has 1,675 stores and Office Max has 900.
“The small stores you know sometimes take a beating, and people do lose their jobs, and that’s unfortunate,” said Sandy Cienik of Penn Hills.
Carnegie Mellon University Tepper School of Business Professor Chester Spatt says office supply stores are no longer a niche market.
“Today they face competition, intense competition, from other types of players, such as Amazon, which is in everybody’s space, and Costco,” he told KDKA money editor Jon Delano.
Spatt says while prices might go up, in this case, that’s less likely, making it good news for consumers.
“It will allow them to compete more effectively with these other players like Amazon and Costco, which to some degree, have been eating their lunch,” said Spatt.