May 2 A shareholder in OfficeMax Inc
sued the directors of the company on Thursday, seeking to block
its acquisition by larger rival Office Depot Inc,
calling the proposed $1.2 billion all-stock deal "grossly
The proposed merger which seeks to help the two suppliers of
office goods slash costs amid fierce competition from online
competitors, has also been criticized for lacking details and
comes at a time when Office Depot is under fire from an activist
Under the terms of the proposed agreement, announced on Feb.
20, OfficeMax shareholders would receive 2.69 Office Depot
common shares for each OfficeMax share they own.
"OfficeMax, if properly exposed to the market for corporate
control, would bring a price materially in excess of the amount
offered in the proposed transaction," the complaint filed by
investor Eric Hollander said.
OfficeMax Chairman Rakesh Gangwal and its CEO Ravichandra
Saligram were among the directors named as individual
defendants, accused of breaching their fiduciary duties to the
company's shareholders. The complaint also accuses Office Depot
of aiding in their breach, and OfficeMax of providing incomplete
information to shareholders.
Nicole Miller, a spokeswoman for OfficeMax, did not
immediately respond to an emailed request for comment. Brian
Levine, a spokesman for Office Depot, declined to comment.
Office Depot's largest shareholder Starboard Value LP is
seeking to unseat certain board members, saying the current
board lacks retail experience, and last month it said it would
be going directly to shareholders in the absence of a scheduled
Office Depot said this week that it would hold a special
meeting with shareholders after the staff of the U.S. Securities
and Exchange Commission finishes reviewing documents relating to
its merger with OfficeMax.
The case is Hollander v. OfficeMax Inc et al, U.S. District
Court, Northern District of Illinois, No. 13-3330.