Office Depot shareholder calls for sale of Mexican JV

Wed Feb 27, 2013 8:45am EST

A man shops at an Office Depot store in New York October 25, 2010. Office Depot said its chief executive will step down next month and reported preliminary third-quarter earnings that beat Wall Street expectations, sending shares up nearly 7 percent. REUTERS/Shannon Stapleton

A man shops at an Office Depot store in New York October 25, 2010. Office Depot said its chief executive will step down next month and reported preliminary third-quarter earnings that beat Wall Street expectations, sending shares up nearly 7 percent.

Credit: Reuters/Shannon Stapleton

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(Reuters) - Office Depot Inc's (ODP.N) largest shareholder, Starboard Value LP, urged the office supply chain's board to explore the sale of its Mexican joint venture interest soon.

Starboard, which owns a 14.8 percent stake in the company, said in a letter to the board it believes the value of Office Depot's 50 percent joint venture interest in the Office Depot de Mexico business is not fully reflected in the retailer's stock price.

Mexican retailer Grupo Gigante (GIGANTE.MX), which owns the other half of the venture, said on February 21 it offered 8.78 billion pesos ($687.34 million) to buy the stake that it does not already own, and that the offer would expire soon.

Grupo Gigante earlier bid for the stake in 2008, but was turned down by the office supply chain.

Starboard said given that Grupo's offer expires on February 28, Office Depot should promptly obtain consent from OfficeMax under its merger deal to immediately explore a sale of the interest.

"If OfficeMax does not consent to Office Depot's negotiations with Gigante or any other potential buyer regarding the sale of the JV Interest, Starboard would view this as both unreasonable and potentially anti-competitive," the shareholder said in the letter.

Office Depot said last week it would merge with smaller rival OfficeMax Inc OMX.N in a $976 million all-stock deal.

Shares of Office Depot were up 2 percent in premarket trading on Wednesday. They closed at $3.99 on the New York Stock Exchange on Tuesday.

(Reporting by Siddharth Cavale in Bangalore; Editing by Maju Samuel)

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