Shareholder asks Office Depot to revoke poison pill

Fri Nov 16, 2012 8:37am EST

(Reuters) - Activist hedge fund Starboard Value asked Office Depot Inc ODP.N to immediately revoke its "poison pill" provision, claiming it limited the influence of shareholders.

In September, Starboard said it took a 13.3 percent stake in Office Depot, the No. 2 U.S. office supply retailer, making it the biggest shareholder in the company. On Friday, the hedge fund said it owned a 14.8 percent stake.

"We believe the implementation of the poison pill, with a threshold just above our current ownership, is designed specifically to entrench the current board," Starboard said in a letter to the board.

Office Depot has been facing tough competition from other office products suppliers as well as mass merchants and drugstores.

Sales at office supply retailers have suffered as corporate customers and other shoppers cut back on discretionary spending in the weak global economy.

Same-store sales at Office Depot's 1,090 North American stores fell 4 percent in the third quarter.

Office Depot shares closed at $2.96 Thursday on the New York Stock Exchange. (Reporting by Nivedita Bhattacharjee in Chicago; Editing by Jeffrey Benkoe)