Breakingviews

Capital Calls: Office Depot’s merger shredder

2 minute read

A man shops at an Office Depot store in New York, October 25, 2010. REUTERS/Shannon Stapleton GM1E6AP1RS301

NEW YORK, May 5 (Reuters Breakingviews) - Concise insights on global finance.

-----------------------------------------------

OFFICE SPACE. ODP (ODP.O), parent company of Office Depot, is shredding Staples’ merger script. After rejecting overtures from its privately held rival, known formally as USR Parent, it said on Wednesday it would separate into two companies. The announcement sent shares up around 10% to almost $47, well above Staples’ January offer price .

According to ODP Chief Executive Gerry Smith, the spinoff has "nothing to do with the Staples transaction at all." That may be the case, though takeover bids and activist agitation alike often jolt companies into accelerated action. The upshot is that Staples, which had also planned to offload the business-solutions division ODP is now going to spin off, will have to offer a higher price if it wants to buy its peer.

It’s a good outcome for Office Depot’s parent. Staples is the best and probably only bidder for its consumer business. Smith is recreating the effect of a bidding war, telling public investors along the way that he had planned to give them more value all along. (By Lauren Silva Laughlin)

On Twitter http://twitter.com/breakingviews

Earlier in Capital Calls:

Intesa builds strength before bad credit storm read more

GM is a wannabe speedy that is stuck in slow lane read more

Stellantis maiden voyage enters stormier waters read more

Nestlé plant-based push is pea in Danone’s shoe read more

UK bank suffers unfamiliar altitude sickness read more

SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: <a href="http://bit.ly/BVsubscribe" target="_blank">http://bit.ly/BVsubscribe</a> | Editing by Richard Beales and Amanda Gomez

Breakingviews
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

More from Reuters