Activist investor Starboard Value to unveil stake in Office Depot -WSJ
Sept 17 |
Sept 17 (Reuters) - Activist hedge fund Starboard Value is expected to disclose on Monday that it has taken a 13.3 percent stake in Office Depot Inc, making it the biggest shareholder of the office products supplier, the Wall Street Journal reported, citing people familiar with the matter.
Starboard CEO Jeffrey Smith wrote in a letter to Office Depot Chief Executive Neil Austrian that the company's shares are "deeply undervalued" but management could take certain actions such as cutting expenses to improve performance, the Journal, which had reviewed the letter, said in a report published early on Monday.
Starboard acknowledged in the letter to Austrian that the industry was under pressure, but said that Office Depot's performance lagged behind that of peers OfficeMax and Staples Inc even though the three companies are structured similarly, according to the WSJ. ()
Although Office Depot has cut some costs and made efforts to improve the format of its stores, Starboard called for reining in expenses, including advertising costs, to boost profitability, the paper said.
An Office Depot spokesman declined to comment to the Journal. The company and Starboard could not be immediately reached for comment by Reuters outside of regular U.S. business hours.
Starboard recently staged a proxy battle with AOL Inc to unseat three directors on the board of the Internet company but lost.
Many investors look at office-supply retailers as a barometer of economic health because demand for their products is closely tied to white-collar employment rates.
Sales at all office supply chains have suffered as corporate customers and other shoppers cut back on discretionary spending in the weak economy.
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